The building society’s latest index survey found house prices rose by 1.6 per cent in August, slowing the year-on-year decline from -6.2 per cent to -2.7. The average cost of a house is now £160,224.
Nationwide chief economist Martin Gahbauer, says the three-month rate of change rose from 2.7 per cent in July to 3.3 per cent in August, the highest level since February 2007. He says: “Exceptionally low interest rates offer some explanation why house prices have not repeated the sharp falls of 2008. Mortgage payments for existing homeowners have been reduced substantially. Before the monetary policy committee began cutting rates, the average interest and principal payment per mortgage holder represented about 38 per cent of the average income. This has fallen to 28 per cent.”
John Charcol senior technical manager Ray Boulger says: “House prices will continue to rise until the Bank of England puts interest rates up to a level which stifles affordability, which will not happen for two or three years”.
London & Country mortgage broker David Hollingworth says it is too early to get excited about “a few positive numbers” and that lending conditions must improve to support a further recovery.