House prices rise further

House prices continued on their uphill path for the fourth consecutive month in October, according to the latest survey from Halifax.
 
The value of the average property lifted 1.2% last month to £165,528 amid stronger demand, a low level of homes on the market and a pick-up in consumer confidence on the back of better economic news.
 
This is still 4.7% lower than in October last year although prices have steadily picked up in recent months.
 
Property values have climbed 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.

Martin Ellis, housing economist says: "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."
 
Mortgage figures from the Bank of England last week revealed that the number of home loans approved but not yet lent rose by 3,000 to 56,000 in September - their highest level since March last year and their tenth consecutive monthly rise. 
 
Nationwide also reported a sixth consecutive monthly rise in prices in October, up 0.4% to £162,038, but warned that the strong upward momentum in property values seen over the summer is showing some signs of moderating in the coming months.

Howard Archer, chief economist at IHS Global Insight remains cautious of the housing market pick-up.
 
He says: "Despite the further significant rise in house prices reported by the Halifax in October, we remain highly doubtful that the house price rally seen since early-2009 can be sustained for much longer.

"Admittedly, very low mortgage interest rates are likely to remain supportive for the housing market for some considerable time to come, but other fundamentals are largely unfavourable - housing market activity is still at a low level compared to long-term norms despite improving in recent months, unemployment is high and still rising, earnings growth is low and still falling, and house price/earnings ratios are currently moving back up," he adds.
 
The forecasting group believe house prices will be at least 5% lower at the end of 2010 compared to now.