House prices reach one-year high

30 October 2009

Property prices were 2% higher in October than in the same month in 2008, with the average house costing £162,038.

But house prices rose at a slightly slower pace of 0.4% in October.

Martin Gahbauer, chief economist at Nationwide, says although house prices rose for a sixth consecutive month in October, the strong upward momentum in property values seen over the summer is showing some signs of moderating as we head into the autumn months. 

He says: “The price of a typical property was 0.4% higher on the month in October, compared to an increase of 0.9% in September and 1.4% in both July and August.  The 3 month on 3 month rate of change - generally a smoother indicator of the near term trend - dropped back slightly from 3.8% to 3.4%.

“At £162,038, the average price of a typical UK property was 2.0% higher than a year earlier, representing the first time since March 2008 that the annual rate of change has been in positive territory.  

“Over the first ten months of 2009, the seasonally adjusted index of house prices has risen by 4.6%, though relative to the October 2007 peak it is still down by 13.1%.   

“A moderation in the rate of house price inflation was to be expected, as the very strong monthly increases seen over the summer months were unlikely to be sustainable over the long run.  Slower house price inflation is also consistent with developments in housing market activity, as industry figures have shown that the pick-up in mortgage approvals for house purchases has lost some momentum in recent months.  

“Although too early to tell for sure, it may also reflect a more natural level of stock available for sale coming to the market, alleviating some of the extreme shortages of property on the market seen during most of this year.”