House prices 'rose by 5.9% in 2009'

Thursday 31st December 2009

House prices in the UK rose by 5.9 per cent over the course of 2009, compared to sharp falls seen the previous year.

Nationwide said the cost of a home went up again in December, and now stands at £162,103; ending what the building society's chief economist termed a "turbulent year for the UK".

While house prices in the UK fell a huge 15.9 per cent last year, they have risen by 5.9 per cent this year, buoyed by an increase in consumer confidence over the last few months which has seen more home purchases agreed.

Yesterday the November data from the Land Registry's house price index also showed a positive monthly house price change of 0.9 per cent; the sixth month in a row in which the movement has been above zero per cent.

Martin Gahbauer, Nationwide's chief economist, said today: "House prices rose by a further 0.4 per cent in December, continuing the recent trend of moderate month-on-month increases.

"At £162,103, the average price of a typical UK property has ended the year 5.9 per cent higher than at the end of 2008. Few could have foreseen this development at the start of the year, when the near term price trend was still pointing to a repeat of the double digit annual decline experienced in 2008.

"Although house prices are still 12.2 per cent lower than their October 2007 cyclical peak, they have now rebounded by an impressive 8.9 per cent since their February 2009 trough."

But the building society believes the future for the UK housing market still remains uncertain, with the labour market and credit conditions still fragile.

"Taking everything together, there is still a significant amount of fog clouding the outlook for house prices. This year's recovery has to some extent been driven by transitory factors and there are reasons to believe that it will lose momentum over the coming year," Mr Gahbauer added.

"At the same time, there is no obvious catalyst on the near-term horizon that would trigger significant renewed falls in prices, such as a sharp spike in interest rates or a further pronounced tightening of credit conditions from present levels. At this stage, therefore, it seems likely that 2010 will see no significant house price movements in either direction.

"However, the experience of 2009 demonstrates how unpredictable the market is at the current juncture and that one should always be prepared for the UK housing market to surprise."

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