House prices jump
HOUSE prices rose by 1.7 per cent last month – the biggest increase for five years.
And in a double dose of good news it appears the economy could be recovering sooner than expected.
Official data revealed the recession is not as severe as originally feared. The nation’s Gross Domestic Product fell by 0.7 per cent between April and June – not the 0.8 per cent predicted. The stock market rose by one per cent yesterday and the pound was up against the euro and the US dollar.
The promising economic figures, accompanied by a weather forecast predicting soaring temperatures by the end of the Bank Holiday weekend, combined to lift the nation’s gloom.
A survey of 36,000 people by internet property agents Rightmove showed 78 per cent think house prices will not fall any further over the next 12 months.
Land Registry statistics, seen as the most accurate barometer of the housing market, revealed prices in England and Wales rose 1.7 per cent last month, the third consecutive monthly increase.
A typical three-bedroom semi now costs £155,885.
The strong monthly gain led to a further reduction in the annual rate at which prices have fallen, down from 13.8 per cent in June to 11.7 per cent, the lowest figure since October last year.
The market has been boosted by record low interest rates of just 0.5 per cent and a shortage of homes for sale.
Steven Lees, head of marketing for email4property.co.uk, said: “This news provides further evidence of a strong summer for the housing market and is another positive step along the road to recovery. While there is still a way to go before we see a return to robust growth, the signs suggest that prices have now stabilised.
“As consumer confidence begins to improve, this could lead to increased activity within the market, as more home owners look to take the next step up the ladder while they can still benefit from relatively low house prices and low interest rates.”
Michael O’Flynn, director of FindaProperty.com, said: “The housing market is on the mend and these figures give us further confidence that we’ve left the worst behind us.”
Rightmove’s commercial director Miles Shipside said: “A rise in consumer confidence is a very encouraging sign for the UK property market. With our index showing steady price increases in popular areas throughout 2009, we are now seeing a circle of confidence building on confidence among the general public.”
The number of homes changing hands in May, the latest month for which figures are available, also increased for the fourth month in a row to 42,699 – 62 per cent higher than the low point reached in January.
Nicholas Leeming, director of propertyfinder.com, said: “Interest from buyers is booming as people look to snap up bargains before prices rise further.”
More than 240 homes were sold for more than £1million during the month, down on the 453 that changed hands for at least a seven-figure sum in May 2008.
Peter Rollings, managing director of estate agent Marsh & Parsons, said: “The house price recovery began in London and is now spreading across all regions in the UK.
“There is a chronic shortage of supply in the capital, which is fuelling intense competition among buyers for properties that remain at attractive prices.
“As a consequence, the gap between acceptable offers and asking prices is rapidly closing.
“In the coming months, rising prices will encourage more sellers to put their properties on the market and, as supply becomes less scarce, house price growth will begin to level off for the remainder of the year.”
The housing market has been showing signs of stabilising in recent months, with prices supported by a shortage of homes as demand from potential buyers increases.
Earlier this week Nationwide said prices rose for the fourth month in a row during August, increasing by 1.6 per cent, while the annual rate of decline fell to just 2.7 per cent.
The British Bankers’ Association said the number of mortgages approved for house purchase had risen to a 17-month high during July as buyer interest reported earlier in the year translated into purchases.
But economists have warned that the market still faces considerable obstacles due to continuing problems in the mortgage market and rising unemployment. Commentators have also said a sudden increase in the supply of homes for sale could trigger renewed price falls.
All regions of England and Wales saw price rises during July, with Wales seeing the biggest monthly gain of 3.1 per cent, followed by the North-east at 2.3 per cent.
The smallest increase was reported in Yorkshire and the Humber at 0.9 per cent, while prices rose by 1.2 per cent and 1.4 per cent in the South-east and South-west respectively.
