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House Prices rise for fifth month
House prices rise for fifth month in succession
Average price of a property in UK now £161,816, back to same level as this time last year
House prices rose for the fifth month in a row in September and are now back to the same level as this time last year, figures released by the UK's largest building society showed today.
Nationwide's latest snapshot of the housing market revealed that prices were up 0.9% over the month, bringing the annual rate of inflation to 0%.
Nationwide said the average price of a property in the UK was now £161,816, up from £160,224 in August.
The figures represent a remarkable turnaround from earlier in the year, when prices appeared to be in freefall.
The average price is now just under £14,000 higher than in February, when it dipped to a low of £147,746, while the annual rate of change has moved out of negative territory for the first time since March 2008.
The three-month trend – which generally offers a better indicator of underlying trends than monthly figures – rose from 3.3% in August to 3.8% in September, its highest level since August 2004.
However, prices are down 13.5% on the peak they reached in October 2007, before the credit crunch took hold, and Nationwide warned that the market remained fragile.
"The further increase in house prices is very much consistent with improvements in a broad range of economic and financial indicators over the last few months, all of which suggest that the most intense phase of the recession and financial crisis has probably passed," Nationwide's chief economist, Martin Gahbauer, said.
"However, given that the housing market still faces considerable headwinds in the form of high unemployment, restrictive credit conditions and an impending withdrawal of the stamp duty holiday, it would be surprising to see house prices continuing to increase at the very strong rate seen in recent months."
Gahbauer said the number of properties changing hands remained well below normal levels – a reason to be cautious.
The percentage of private sector housing changing hands moved up slightly from 3% at the end of last year to almost 4%, but remains way below its pre-downturn level of between 7% and 8%.
"Under normal circumstances, the current turnover rate would probably still be too low to be consistent with positive house price inflation," Gahbauer said.
"However, during periods when only a small proportion of the housing stock is available for sale, even a relatively low turnover rate can be consistent with increasing house prices."
The number of mortgage approvals for house purchases has been creeping up in recent months, suggesting that the turnover of properties would continue to edge higher for the next few months.
However, Gahbauer said it would take another 18 months for transactions to return to their "normal" level at the current rate of increase.
Nationwide's regional figures for the third quarter of the year showed that all regions of the UK saw house price rise compared with the previous three months.
Northern Ireland saw the biggest quarter-on-quarter change – 9.7% – followed by the south-west of England at 4.9% and the outer Metropolitan region of London at 4.7%.
Prices were 4.1% higher in the outer south-east, but the average price growth in Wales was only 0.1% during the third quarter.
On an annual basis, house prices in Scotland are now only 1% lower than they were a year ago, but they are 8% down in Northern Ireland.
Official figures for house prices in England and Wales have been less bullish than those published by Nationwide and its rival lender Halifax, although there have also been signs of a stabilising market over recent months.
Last week, the Land Registry reported a slight drop in prices in August, although prices in London and the West Midlands were up by 0.8% over the month.