House prices rise for second consecutive month
03/06/2009
The housing market was taken by surprise today when house prices rose for the second time in three months.
Nationwide's monthly figures for May discovered house prices rose by 1.2 per cent, taking the annual decline to 11.3 per cent, a sharp improvement from 15 per cent.
But Nationwide warned the 'spring bounce' in prices does not necessarily signal the last of the house prices falls.
Martin Gahbauer, Nationwide's chief economist, said: "Although the short-term trend in house prices has clearly improved from where it was at the beginning of the year, it is still too early to say that the market is turning definitively.
"During the downturn of the early 1990s, there were many months during which prices rose, only to fall back down again in subsequent periods.
"Nonetheless, the improvement in house price trends is consistent with signs of stabilisation in several other economic indicators and suggests that any further price declines may occur at a less rapid pace than in 2008."
Michael White, chief executive of online mortgage adviser Email Mortgages.com, added: "Those looking for further evidence of green shoots will point to increased first-time buyer activity in the market, positive noises from estate agents and the recent Rightmove average asking price figures which also showed an increase.
"However, the fact remains that it is very early days to be suggesting a full-blown UK housing market recovery."
The average house price has now risen from £151,861 to £154,016.
The upward movement of house prices could be explained by a recent stabilisation of the ratio of sales to unsold stock, as published by the Royal Institution of Chartered Surveyors (Rics), Nationwide said.
But with unemployment still rising and credit conditions remaining tight, demand is likely to remain low for some time, while supply will be constricted while sellers are reluctant to put their home on the market while prices are depressed.
If demand starts to rise while supply levels stay low, prices could begin to rise again.
"For the moment, however, it is unclear how the balance between supply and demand will ultimately work through in the coming months," Mr Gahbauer said
Nationwide's monthly figures for May discovered house prices rose by 1.2 per cent, taking the annual decline to 11.3 per cent, a sharp improvement from 15 per cent.
But Nationwide warned the 'spring bounce' in prices does not necessarily signal the last of the house prices falls.
Martin Gahbauer, Nationwide's chief economist, said: "Although the short-term trend in house prices has clearly improved from where it was at the beginning of the year, it is still too early to say that the market is turning definitively.
"During the downturn of the early 1990s, there were many months during which prices rose, only to fall back down again in subsequent periods.
"Nonetheless, the improvement in house price trends is consistent with signs of stabilisation in several other economic indicators and suggests that any further price declines may occur at a less rapid pace than in 2008."
Michael White, chief executive of online mortgage adviser Email Mortgages.com, added: "Those looking for further evidence of green shoots will point to increased first-time buyer activity in the market, positive noises from estate agents and the recent Rightmove average asking price figures which also showed an increase.
"However, the fact remains that it is very early days to be suggesting a full-blown UK housing market recovery."
The average house price has now risen from £151,861 to £154,016.
The upward movement of house prices could be explained by a recent stabilisation of the ratio of sales to unsold stock, as published by the Royal Institution of Chartered Surveyors (Rics), Nationwide said.
But with unemployment still rising and credit conditions remaining tight, demand is likely to remain low for some time, while supply will be constricted while sellers are reluctant to put their home on the market while prices are depressed.
If demand starts to rise while supply levels stay low, prices could begin to rise again.
"For the moment, however, it is unclear how the balance between supply and demand will ultimately work through in the coming months," Mr Gahbauer said