House prices in Britain rise again in June

HOUSE prices saw a monthly increase of 0.9 per cent in June, bringing the annual rate of decline to 9.3 per cent from 11.3 per cent in May, according to data published yesterday by Nationwide, which stoked optimism that the housing market has turned.

The mortgage lender said that the  three month rate of change, which is a smoother indicator of the short-term price trend, turned positive for the first time since December 2007 to stand at 0.9 per cent, up from -0.4 per cent in May.

Martin Gahbauer, Nationwide’s chief economist, said: “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.”

Encouragingly, the stock of property available for sale has continued to fall as potential sellers and builders have responded to depressed demand conditions by reducing the supply of property coming onto the market. As a result, prices have been able to stabilise even in the face of very low demand, Nationwide said.

But property economists remained cautious in spite of improving housing market evidence.

Howard Archer at IHS Global Insight said: “Much will clearly depend on whether or not the economy can sustain its recent improvement, how much further unemployment rises and how many properties come on to the market over the coming months.”

Capital Economics’ Seema Shah said: “House prices are still overvalued, the recovery in activity appears to be wavering, unemployment is set to rise further and credit conditions remain tight. Thus, while this stronger trend may be extended for a few more months, the housing market correction has not ended.”