Surprise rise in UK house prices - Emerging Real Estate

Surprise rise in UK house prices

13/11/2011

 Surprise rise in UK house prices

In a surprise to many market observers, house prices rose slightly last month, increasing by 0.4% despite the widespread concerns that the UK is heading again towards recession. This was the first positive move in 6 months and shows a 0.8% year on year increase.

It is thought that the low interest rates that underpin mortgages have sparked a small increase in sales. Martin Ellis, housing economist for Halifax, commented that “the housing market has proved highly resilient in recent months despite the weak economic recovery and the deterioration in the outlook for both the UK and global economies. Despite these developments, house sales and the supply of properties for sake have remained very stable since late 2010”. He continued to say “the prospect of exceptionally low official interest rates over the foreseeable future is likely to continue to support the market in the face of a very difficult economic climate”.

The RICS however have taken a more cautious view, suggesting the reason for the rise in sales is due to an increasing sense of realism amongst sellers & the consequent lowering of property prices in order to create a sale.  Ian Perry, a spokesman for RICS, warned that “with the chaotic events in the euro area threatening to spill over to the UK and banks still imposing tough conditions on loans to first time buyers, any recovery in sales is likely to be relatively modest”.

Whatever the reason, analysts agree that a rise in house prices in the current climate is certainly an optimistic sign of market recovery, albeit a small one. It is worth remembering of course that house prices still remain low and investors can therefore maximise their opportunities by investing while the market remains in a state of flux.