Shock rise in house prices – again!
Contrary to predictions, house prices in the UK rose for the second month in a row in June, as well as showing the smallest annual drop (9.3%) since July 2008. Instead of the 0.5% drop predicted by economists, house prices rose 0.9% in June, with the average cost of a home now standing at £156,442, up from £154.016 in May.
[UKPRwire, Fri Jul 03 2009] Contrary to predictions, house prices in the UK rose for the second month in a row in June, as well as showing the smallest annual drop (9.3%) since July 2008. Instead of the 0.5% drop predicted by economists, house prices rose 0.9% in June, with the average cost of a home now standing at £156,442, up from £154.016 in May.
The figures from the latest Nationwide Building Society report the first positive three-monthly trend in house prices since December 2007, suggesting that the property slump is over the worst and the market is on the rebound.
The rise in consumer confidence in June is another positive sign, rising to -25 from -27, the highest in more than a year, according to the UK Consumer Confidence Indicator.
But with the economy in recession and other critical factors continuing to perform poorly, it is too early to talk of a full-scale and sustainable price recovery in the housing market. Rising unemployment has stymied demand, and the decline in mortgage lending has reached historic lows, with May showing the smallest increase in mortgage approvals since records began in 1993.
The unusually low levels of stock available for sale has helped to stabilize prices, but these dynamics will change if vendors who have been waiting for prices to improve put their properties on the market.
“The slight increase in house prices over the last two months will be especially welcome news for sellers,” said Lawrence Smith of Decision Homebuyers, “many of whom have been sitting on their properties for a long time waiting for just such a turn-around. At the same time, until the levels of demand and lending improve significantly, they shouldn’t expect to see droves of buyers at their door just yet.”
The growth in housing market activity that would be needed for a full-scale recovery continues to be impeded by low levels of lending. First-time buyers are still finding it very difficult to obtain mortgage financing, an obstacle which stifles the main driving force on the demand side.
As Michael White, chief executive of online mortgage broker Email Mortgages.com, commented, "We would be able to see much more housing market activity if lenders operated sensible lending policies rather than looking to operate with no risk, forcing many would-be purchasers to curtail their efforts to get on the property ladder."
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