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House Prices Up in October

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According to the Halifax, house prices rose by 1.2% in the month of October – the same month in which the Royal Institute of Chartered Surveyors (RICS) announced that market activity had shown signs of picking up.  The Halifax, which is part of Lloyds TSB Banking Group, said that the housing market had remained “highly resilient” despite the increasingly gloomy outlook for the UK economy.  The average house price now stands at £163,311, according to the bank, which means that prices have fallen 1.8% from 12 months ago. 

Martin Ellis, Halifax’s housing economist said: “The housing market has proved highly resilient in recent months, despite the weak economic recovery and the deterioration in the outlook for both the UK and global economies.  The prospect of exceptionally low official interest rates over the foreseeable future is likely to continue to support the market in the face of a very difficult economic climate.  Both prices and activity levels are expected to remain close to current levels over the coming few months.”

The bank’s findings are similar to the picture painted by the Nationwide Building Society, one week earlier.  It said that house prices had risen by 0.4% in October, with property value 0.8% higher than one year ago.  Commenting on the survey, Robert Gardner, Nationwide’s Chief Economist said: “Given the challenging economic backdrop, October’s data is encouraging, but it doesn’t fundamentally change the picture of a housing market that is treading water.”  He went on to say that house price growth was likely to “move sideways” or start “drifting modestly lower” over the next year. 

Meanwhile the latest poll of RICS surveyors suggested that there could be new life in the property market with sales and new buyer enquiries edging up from the previous month of September.  Some of its members suggested that the increase was due to sellers being more likely to take a lower offer to secure a sale, and a greater proportion of surveyors reported that prices had fallen, rather than risen, and that they expected this trend to continue.

There was no good news from RICS for first time buyers though; with the euro zone crisis seemingly in full swing, UK banks will find it harder to secure the mortgage funding that they need, so therefore, home deposits will remain high.