House prices are higher than they were one year ago says the Nationwide. That’s no mean feat when you rewind to the start of this year when property value was in freefall in many areas of the country. The building society say that house prices went up by 0.4% in October and are 2% higher than at the corresponding time in 2008 (the first annual rise cited in 19 months). This is the sixth consecutive monthly rise reported by Nationwide and brings the average house price up to £162,038.
Commenting on the latest figures, Martin Gahbauer, chief economist at Nationwide said: “A moderation in the rate of house price inflation was to be expected, as the very strong monthly increases seen over the summer months were unlikely to be sustainable over the long-run.” He also went on to state that he expected to see prices level out in the coming months as more sellers are expected to come onto the market. The quarterly figures, considered as a more reliable indicator, dropped slightly from 3.8% in September to 3.4% in October.
The UK being in recession has had a mixed effect on the housing market. On one hand, people have lost their jobs or had their wages frozen, which has caused house prices to fall. On the other hand, interest rates being at an historic low has given the market a shot in the arm, by making property more affordable. If the country was to come out of recession, interest rates would go up, leaving many of us in the strange situation of actually hoping the recession continues.
Commenting on the current situation, RICS indicated that the price rises continue to be driven by the lack of supply. They also point out that with the stamp duty holiday coming to an end soon, this could slow the current trend of market recovery. Simon Rubinsohn, chief economist at RICS, said: “At a time when first-time buyers are still struggling to access mortgage finance and, in most cases, reliant on hefty support from parents to take an initial step onto the market, the risk is that the move to end the holiday could arrest the tentative improvement in turnover.”