House prices increased by 1.2% in October, marking the fourth consecutive monthly increase.
Nationally, house prices have risen by 2.9% since the end of 2008.
Commenting, Martin Ellis, housing economist, said: “They are now 7.1% higher than six months ago when prices reached a trough in April. Demand for houses has risen in recent months due to the very low level of interest rates, the decline in property prices since the summer of 2007 and a pick-up in consumer confidence on the back of better economic news. Higher demand has combined with a low level of properties available for sale to result in rising house prices over the past few months.
There are some indications that more people are deciding to put their homes on the market, encouraged by the recent improvement in market conditions. A continuation of this trend could help to improve the balance between supply and demand, curbing the strength of the stimulus to house prices resulting from the current imbalance.”
Key Facts:
• Prices in the three months to October were 2.9% higher compared to the previous three months.
• Nationally, the average house price has risen by 2.9% (£4,667) since December 2008. Prices have increased by 7.1% during the past six months since reaching a trough in April 2009; an increase in the average price of just over £11,000. This follows a decline of 23% between August 2007 and April 2009.
• House prices in October were 4.7% lower on an annual basis. The annual rate of change (measured by the average for the latest three months against the same period a year earlier) has fallen sharply from a low of -17.7% in April. It is at its lowest since May 2008 (-3.8%).
• Higher demand and supply shortages have pushed up house prices. A further rise in sales, combined with virtually no change in the stock of properties available for sale, caused the ratio of house sales to the stock of unsold properties on surveyors’ book to increase for the ninth successive month in September. The increase in this ratio to its highest level since December 2007 indicated a continuing tightening in market conditions. New instructions to sell increased for the fourth successive month, suggesting that more homeowners are being encouraged to try and sell in light of the improvement in market conditions. (Source: RICS monthly survey, September 2009.)
• Lower interest rates have reduced mortgage payments. Monthly repayments accounted for an estimated 21.5% of average gross household income in October 2009 for existing mortgage borrowers. This is the lowest proportion of income devoted to mortgage repayments since mid 2004 and compares with a peak of 26.9% a year ago in October 2008.
• Housing market activity improves again but remains very low. Bank of England industry-wide figures show that the number of mortgages approved to finance house purchase – a leading indicator of completed house sales – increased for the tenth successive month in September, on a seasonally adjusted basis. Approvals were 68% higher than in September 2008, at 56,215, but were still 44% lower than in September 2007 (100,095).
