Surprise Rise in House Prices

by Mark Johnston

House prices have fallen 1.5% to £165,738 on average, the biggest fall since August 2009, in the year up to June 2012 according to Nationwide building society. The worse than expected figures were blamed on the poor economic climate.

A year ago, in May 2011, house prices were falling at an annual rate of 4.2%, but there has been an improvement in the annual rate of change over the past 12 months.

Many experts believe that economic conditions are likely to remain challenging over the next 12 months at least.

Mark Harris, of mortgage broker SPF Private Clients, says “while recent lending figures from the Council of Mortgage Lenders (CML) were encouraging, here we are back down to earth with a bump”.

Russell Quirk, of estate agents, added that “the market is still on a knife edge and anyone looking to sell on the current market has to put their property on at the right price, or be prepared to wait indefinitely”.

There are hopes that the ‘funding for lending’ scheme could possibly kick start lending. The scheme was recently announced by the Bank of England and the Treasury.

Although it is still believed to be too early to see what effect the emergency fund will have and whether it will mean cheaper mortgage deals for those with small deposits.

Halifax’s figures fro June have contradicted rival lender Nationwide report of a 1.5% fall in June, has took many economists by surprise

According to theHalifax’s latest house price index it does seem however that house prices are showing a marked improvement in June 2012, the prices increased by 1% month on month.

Howard Archer, chief economist at IHS Global Insight, said “we are surprised by the 1% rise in house prices in June”.

The Halifax also suggested that some recent improvements in the employment market and low levels of mortgage payments by historic standards may have helped to keep prices up.

Housing experts have warned that it would be wrong to se the figures from theHalifaxas a sign that the housing market is becoming strong again.

Martin Ellis, housing economist expects “little changes in prices and sales over the remainder of this year”.

However, despite the minefield of difficulties faced by first time buyer’s a survey by Rightmove, the property website, found that the number of first time buyer has risen to the highest level in two and half years.

It seems some 27.9% of first time buyer’s who searched the property website said that they intended to buy a home in the next 12 months.

Miles Shipside, director of Rightmove, suggests that these results “come as a welcome surprise, the property market needs this upward trend in first time buyer activity to continue, as first time buyers perform an essential role at the bottom of the property market food chain”.

Although this all said the Bank of England has warned that in the coming months deals for first time buyers will be tougher to find and they will also become more expensive.

Story link - Surprise Rise in House Prices

Related stories to : Surprise Rise in House Prices