UK Property Prices Rise by 1.2%

Recent report by Nationwide Building Society suggests that property prices in the UK have unexpectedly risen by 1.2% in May, which represents the strongest monthly gain in a 19-months period. The increase in house prices refutes the forecasts of analysts, who said that property prices in May will fall by 1%, and offsets the 0.3% price decline in April. At the moment an average house in the United Kingdom is estimated at £154,016, which is still 11.3% lower than in the same month last year. Martin Gahbauer, chief economist at Nationwide claimed that although it is too early to say that the market has reached the bottom, the trend of rising property prices goes along with other signs of market stabilization, which allows to suggest that further price declines will occur at a slower pace. Mr. Gahbauer added that in his opinion the May increase in property prices might be explained by a greater demand among buyers, who were tempted by falling mortgage rates. He also said that if the buyers’ interest translates into actual purchase activity and is not overweighed by extended supply, the trend associated with the increase in house prices might continue. Suren Thiru, Halifax housing economist claimed that despite the fact that the UK has seen slight price stabilisation recently, the prospects of the market remain challenging because the level of unemployment across the country is rising, while the level of consumer confidence and credit availability stay low. The Halifax report on UK property prices is due next week. It should be noted that last month Halifax reported a 1.7% price drop, compared to 0.3% decrease reported by Nationwide. This fact was highlighted by Howard Archer, IHS Global Insight chief economist, who said that the new figures will definitely fuel speculations about the state of the UK property market.