Nationwide Building Society have reported an increase for the fourth consecutive month in house prices with the average price now standing at £160,224 for August compared to £158,871 recorded in July 2009 - which is the fastest growth recorded in 2.5 years. The report showed a 1.6% increase in August following on from a 1.4% rise in the previous month which has significantly reduced the annual rate to -2.7%, the smallest rate since -6.2% recorded in April 2008.
One of the UK’s largest property search websites described this as a “major u-turn” of the economic recession - with its latest report confirming that nearly 78% of those polled believed that house prices would continue to increase over the next 12 months compared to the 66% figure recorded in January 2009. This would seem to demonstrate an increase of consumer confidence in the property market.
The general lack of availability in the market coupled with the growth in demand due to the continuous low interest rates, has been credited for the increase in prices; however a recent report carried out by the Co-operative bank showed that 35% of vendors were unwilling to accept an offer below the full asking price whilst only 12% of buyers would be prepared to offer this when purchasing a property.
The overall trend seems to be optimistic - with a return of confidence in the housing market, which would seem to be borne out by vendors holding firm on their asking price. However, it has been suggested that when the interest rate begins to rise, the subsequent recovery could be bumpier than expected. Peter Dixon an Economist at Commerzbank confirmed “I’m still not convinced that this marks the start of an upturn … there’s still scope for a slight leg downwards, but a worse case scenario seems to have been avoided”.