June house prices rise 0.9%

Tuesday, 30, Jun 2009 12:13

Nationwide building society says house prices in June rose by 0.9 per cent.

The three month rate of change was positive for the first time since December 2007, but Nationwide said a "sustained recovery still faces risks".

This most recent rise brought the annual rate of decline to 9.3 per cent, from 11.3 per cent, and saw the average price of a home increase from £154,016 to £156,442.

Martin Gahbauer, Nationwide's chief economist, said: "House prices have now risen in three of the last four months, suggesting that the improvement that began to show up in March represents more than just statistical noise.

"What is unusual about the recent trend reversal, however, is that it has taken place against a background of transactions activity that is still very low by historical standards."

Land Registry figures released last week found house prices in May had fallen by 0.2 per cent. Yesterday figures from the Bank of England found mortgage approvals had risen modestly, while remortgaging hit a real low.

Mr Gahbauer added: "While it is encouraging to see that prices are no longer seeing steep falls, there are still many obstacles in the way of a genuine and sustainable price recovery.

"On balance, the stabilisation of house prices is a welcome surprise that did not seem likely at the beginning of the year. However, there are still considerable headwinds facing the demand side and until we see a more robust recovery in house purchase activity, it is too early to be confident about a full-scale recovery of prices."

However, the National Association of Estate Agents (NAEA) also said yesterday there were improvements in terms of stock, with a third of estate agents gaining ten per cent more properties on their books.

Simon Rubinsohn, Royal Institution of Chartered Surveyors (Rics) chief economist said: "Tempting as it is to conclude that the bottom has now been seen in the pricing cycle, there are still considerable headwinds for the housing market to overcome, most notably in the form of further significant job losses during the balance of this year.

"In addition, rising market interest rates are likely to exert some upward pressure on mortgage rates even before any official move is made to begin taking back some of the monetary stimulus. That said, without any rise in new instructions the shortage of property could remain a key determinant of the market's fortunes."