UK house prices continue to rise

Posted 26/08/2009

House prices in the UK continued to rise this month, bringing down the annual rate of decline in the property market.

Figures from Nationwide show that prices rose by 1.6 per cent in August compared to the previous month.

This followed a 1.4 per cent increase in average values in July and brought the year-on-year fall in prices to 2.7 per cent, down from 6.2 per cent.

Nationwide suggested that low interest rates are supporting house prices and preventing the sharp falls witnessed in 2008 from occurring again.

However, the building society’s chief economist Martin Gahbauer pointed out that rates will not stay at their current 0.5 per cent level forever.

“It is important to keep this in mind when interpreting recent price trends,” he remarked, adding that the price increases of recent months would be difficult to sustain if rates were to rise again and dampen property purchase demand.

Meanwhile, figures from the Co-operative Bank Mortgages show that 54 per cent of people have become more optimistic about the housing market recently.

As a result, some 35 per cent of sellers are reluctant to drop the asking price when putting their property up for sale.