Sun shines on May house prices

Friday 29th May 2009

House prices were up for the second time in three months according to the latest figures from Nationwide.

The monthly figures published show house prices rose by 1.2 per cent in May, taking the annual decline to 11.3 per cent, a sharp improvement from 15 per cent.

The rise lifted the average house price to £154,016, but experts warn the 'spring bounce' may not necessarily signal the last of the house prices falls.

Martin Gahbauer, Nationwide's chief economist, said: "Although the short-term trend in house prices has clearly improved from where it was at the beginning of the year, it is still too early to say that the market is turning definitively.

"During the downturn of the early 1990s, there were many months during which prices rose, only to fall back down again in subsequent periods.

"Nonetheless, the improvement in house price trends is consistent with signs of stabilisation in several other economic indicators and suggests that any further price declines may occur at a less rapid pace than in 2008."

The upward movement of house prices could be explained by a recent stabilisation of the ratio of sales to unsold stock, as published by the Royal Institution of Chartered Surveyors (Rics), Nationwide said.

As unemployment continues to rise and credit conditions remaining tight, experts warn demand will likely remain low for some time, while supply will be constricted while sellers are reluctant to put their home on the market with prices depressed.

If demand starts to rise while supply levels stay low, prices could begin to rise again, they add.

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