House prices continue to rise

1 December 2009 8:42 am | By Lee Jones

The building society says house prices have now risen, on average, 2.7 per cent over the last 12 months. Its latest house price index found that the average house price rose to £162,764 in November, up from £162,038 in October.

Nationwide says the average house price is now at early 2006 figures, but says that the three month on three month data, which is a good indicator of general trends, is levelling out compared to earlier in 2009.

Nationwide chief economist Martin Gahbauer says while unemployment is still rising, it is unlikely it will reach the 3 million mark by the end of the year and has yet to have a significant impact on the housing market.

He says: “The outlook for the housing market remains crucially dependent on labour market conditions, and here recent developments have been somewhat more encouraging than might have been expected.”

Carter Jonas head of research Catherine Penman says:  “The November Nationwide data adds to the growing feel-good factor around the residential property market.

“House prices continue to defy the odds given the uncertain economic environment. But we are very conscious that more people lose their jobs exiting a recession than going into one so the next six months will be crucial.

“Two factors have been responsible for the increase in house prices during 2009. Earlier in the year, the driver was affordability, as properties and mortgage finance were available at historically very low price levels, thus stimulating demand. From the summer onwards, the rebound in prices has been more supply than demand-driven, a result of the sheer lack of stock.

“Despite improving economic data and sentiment, prices are likely to remain stable in 2010, especially prior to the general election, when caution will remain the watchword.”

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