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House prices see highest rise in 5 years
August 31st 2009
For the fourth consecutive month, house prices in the UK have risen in August, by 1.6%. And figures from Nationwide’s latest monthly survey show that they are rising at their fastest rate for two and a half years.
The average price of a UK property is £160,224, while the annual rate at which house prices are falling slowed from 6.2% to 2.7%.
Following on the heels of the Nationwide survey, figures from the Land Registry confirmed the trend, showing a jump in prices of 1.7% in July, the biggest monthly rise in five years. The figures showed monthly increases across all regions of England and Wales in July, though prices were still 11.7% lower in July than they were at the same time a year ago, and sales were down as well.
But in another encouraging sign that the market is improving, 78% of respondents to a survey by the property website Rightmove were confident that the bottom of the UK market had been reached. This was in sharp contrast to survey results from January, which showed that 66% of those surveyed felt that house prices would continue to fall over the next 12 months.
The rise can be partly attributed to the shortage of homes on the market, leading to a boost in demand in favour of sellers. The main factor that has helped make properties more affordable for first-time buyers are the low interest rates, which have been held at 0.5% since March. Also, the government’s injection of £50 billion into the economy through the quantitative easing programme has helped fuel the property market’s ‘mini-boom’, said Nationwide.
Estate agencies are also reporting improved activity. Hamptons estate agency reported a 4.2% rise in average sale prices in the second quarter of 2009 over the previous quarter, while applicants for properties had increased by 75% over a year ago.
Cluttons estate agent said that London sellers were getting offers within 2% of their asking price, compared to steep discounts of up to 30% that they were being forced to offer a year ago. The better odds of a successful sale – with 1 in 4 viewings resulting in an offer – is further boosting confidence among vendors, with a third of them saying they are not prepared to lower their asking price, according to a survey from The Co-operative Bank.
“Sellers who have been waiting for prices to start to rise finally have something to feel pleased about,” said Lawrence Smith of Decision Homebuyers. “But there is no guarantee that the trend will continue – since low stock levels are driving the increase in prices, a surge of properties onto the market could still put the brakes on continuing rises.”
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