UK House Prices Continue with the Upward Trend - Halifax

The latest information on UK house prices was revealed today, on October 6th, in a report by Halifax, a British building society. According to the report, house prices in the UK saw a 1.6% increase this September, marking the 3rd consecutive month of rises this year. On a national basis, the prices on UK property rose by 1.7% since the last quarter of 2008. Despite the fact that house prices are still 7.4% lower than at the same time last year, there is still an improvement compared to the level of year-on-year difference in house prices marked in August 2009 (10.1%). In the opinion of Mr. Martin Ellis,  housing economist at Halifax, the increases in house prices, which were registered in the past months, are mainly due to low supply of houses and high demand from buyers. He added that the level of demand might well have been caused by low mortgage interest rates, which resulted in the fact that mortgage payments as percentage of total household income are now significantly below the 25 years’ average. Unfortunately, Mr. Ellis said that the current increases in house prices might not receive further development as the rate of UK unemployment continues to increase, restricting buyers’ demand. Moreover, more property owners feel like putting their houses on sale, which, naturally, contributes to a rise in supply and, thus, a decline in asking prices. Mr. Ellis’ words found proof in the statement of Mr. Howard Archer, HIS Global Insight economist, who said that the current price rebound is very similar to the one seen in April 2009. He added that house prices are highly likely to fall again as the sharp and sustainable increase is too early to expect. In the opinion of Archer, the future of house prices in UK strongly depends on the overall financial situation, which includes economic growth, rate of unemployment, lending conditions, and property supply.