Nationwide Say House Prices Rose 0.9% in June
The latest survey from the Nationwide building society UK house prices rose by 0.9% in June.
It said this was the third rise in the past four months, and shrank the annual rate of decline to just 9.3%, from 11.3% in May.
The increase in prices during the past month means the average home now costs £156,442, which is £15,973 less than a year ago.
The Nationwide said the stabilisation of prices was a “welcome surprise”.
Since their recent low point in February, of £147,746, average UK house prices as measured by the Nationwide have now risen by £8,696.
“House prices have now risen in three of the last four months, suggesting that the improvement that began to show up in March represents more than just statistical noise,” said the Nationwide’s economist Martin Gahbauer.
“What is unusual about the recent trend reversal, however, is that it has taken place against a background of transactions activity that is still very low by historical standards,” he added.
The Nationwide said the best measure of short-term trends was to compare the average price for the past three months with that for the previous three.
On that basis, prices were now 0.9% higher, the first time they have been on an upward trend since December 2007.
The building society said that if this pattern continued then this year would end with prices down by only “small single digits”.
“This would represent a stark shift from trends seen at the turn of the year, when most indicators were pointing to a repeat of the large declines seen in 2008,” it said.
Although there has been no let up in rationing of loans by mortgage lenders, the building society said potential sellers, and builders, were putting very few properties up for sale, which was bringing some equilibrium to prices.
But it warned against interpreting its latest data as the beginning of a sustained recovery in prices.
Abnormally low supply levels would not last for ever, it warned.
The increase in the enquiry pipeline has not yet led to large increases in sale volumes, because credit criteria remain significantly more restrictive than in the years leading up to the downturn,” said Mr Gahbauer.
“Rising unemployment and associated job insecurity are also limiting the extent to which enquiries can translate into real transactions,” he added.
A report by HM Revenue & Customs (HMRC) Last week said that completed house sales in the UK had risen again in May, to their highest level since last October.
And on Monday, the Bank of England reported that the number of mortgages approved by lenders, but not yet lent, had risen for the fourth month in a row in May.
This suggests that the revival in buying and selling seen this spring may continue into the summer.
“Nationwide house price data provides further evidence that the residential property market appears to have found a floor, at least for the time being,” said Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors.
Not all measures of house prices are pointing in the same direction.
Although the rival survey from the Halifax has also detected a recent upturn in prices, more comprehensive figures from the Land Registry for England and Wales reported that prices had still fallen in May, by 0.2%.
This meant the annual rate at which prices had dropped was 15.9%.
Mortgage Lending Continues To Slump
UK mortgage lending by the major banks has rapidly drooped, with figures showing approvals for house purchases 60% lower than a year ago, .
According to the British Bankers’ Association (BBA) the number of mortgage approvals for house purchases fell by 14% in November to a new low of 17,773.
People remain worried about the effect of the slowing economy on their personal finances, the BBA said.
As a result, the amount consumers are borrowing also remained subdued.
The number of people re-mortgaging but staying in their existing home also dipped significantly in November, with many homeowners unable to find a better deal to switch to.
This fell to 29,798, almost half of the 52,452 of the previous month, and the lowest for eight years.
Mortgage lenders withdrew a number of deals from the market and assessed what they were offering in November after the shock 1.5 percentage point cut in interest rates by the Bank of England.
Potential buyers also held off to see what effect the Bank rate cut would have, the BBA said.
With house prices still falling and people waiting to see whether mortgages would get significantly cheaper, activity in the mortgage market remained stagnant.
“People remain concerned about the impacts of the rapidly slowing economy on their personal finances,” said BBA statistics director, David Dooks.
Liberal Democrat Treasury spokesman Vince Cable said that the figures showed there was a “very serious problem” with mortgage supply.
“It is understandable that people are not willing to buy in a falling market but the figures suggest that there are people who would buy if mortgages were available on reasonable terms,” he said.
“The government and the mortgage industry will have to come up with ideas on how to restore responsible lending.”
The Conservatives have claimed the bank bail-out package is failing to revive the housing market.
With prices falling and banks demanding a bigger deposit from buyers, the average amount borrowed by home-movers has also been falling.
In November, the average amount borrowed was £117,000, down nearly 24% on a year ago.
The trends showing a lack of activity in the housing market, reported by the BBA, were confirmed by the latest provisional figures for November from HM Revenue & Customs (HMRC).
Its seasonally adjusted figures showed that residential property sales were down in November to 53,000 in the UK. That is lower than the previous month and 60% down on the same month a year ago.
Other borrowing ahead of Christmas also remained relatively subdued.
Growth in credit card borrowing was in line with the recent average, with the annual rate of growth up to 7.9%. Borrowing on overdrafts and personal loans was low, the BBA said.
But the amount of money being saved with the UK’s major banks shot up in November.
Personal deposits in UK banks went up by £3.9bn in November, having been at a monthly average of £600m during the previous six months.
The BBA suggested this reflected, in part, people receiving compensation for their savings lost in the collapsed Icelandic banks and putting that money into UK bank accounts.
Products offered by High Street banks attracted funds by savers, the BBA said.
