House price rises are extending beyond London but fears remain

The housing market revival is spreading to the regions. Nationwide, the lender, last week revealed that — thanks to five consecutive months of house price rises — the value of the average home in the UK has recovered to levels last seen before the collapse of Lehman Brothers a year ago. Halifax house price data, out this week, added to the mood, reporting another monthly increase of 1.6 per cent in September, taking the average price to £163,533.

For the first time, the news should bring cheer across the country. Fears had been growing that this recovery would affect values only in London — and some dormitory towns and villages near by. The capital has benefited from overseas buyers with plenty of currency to spend, and a high proportion of buyers with generous amounts of equity and secure jobs. Elsewhere, fewer buyers have been able to move, leaving housing markets slower to bounce back.

But Nationwide’s research indicates that over the past three months prices have risen in every single region of the UK. The increases range from a negligible 0.1 per cent in Wales to 4.9 per cent in the South West — and even include the first rises in Northern Ireland (up 9.7 per cent), a market that rose sharply in the last part of the housing market boom and then was ravaged, with falls of 35 per cent from the height of the boom.

The most resilient region appears not to be London, but Scotland, where prices are only 1 per cent lower than a year ago. Scott Brown, a partner at Warners, in Edinburgh, says: “Over the past ten weeks we have sold 133 properties, compared with just 100 over the same period in 2008. We still have a long way to go before we see a full recovery. However, we have certainly moved forward considerably from where we were 12 months ago.”

Martin Gahbauer, the chief economist at Nationwide, says that the increases, consistent with better economic times, “suggest that the most intense phase of the recession and financial crisis has probably passed”.

This prediction may prove correct, but Gahbauer and other experts warn that further falls cannot be ruled out. Unemployment continues to increase, depleting confidence, while interest rates are predicted to rise from historic lows from next year (likely before lenders have begun to decrease the generous margins on the base rate that they now enjoy). Brigid O’Leary, the senior economist at the Royal Institution of Chartered Surveyors, warns that these factors will subdue the mood for the next 12-18 months.

Observers suspect that the headline house price rises will entice more homeowners into the market, boosting supply and, according to Martin Ellis, the housing economist at Halifax, potentially curbing the rate of house price growth.

Until then, sellers are enjoying the kind of good times that many homeowners did not expect to see for some time. James Hyman, a partner at Cluttons, a London-based agency, says they “should make hay while the sun shines”. Now, the advice applies outside the capital, too.

What the agents say

If a property is priced higher than three months ago but a little less than a year ago, it will now sell, and sell very quickly.

Andy Goundry, Goundry Pearce, Truro

Sellers can now afford to be optimistic when they price their home, but they should not dare to be greedy if they want their house to sell.

Nick Salmon, Harrison Murray, Home Counties and Midlands

The lack of property is hardly surprising. Why would anyone want to sell their prime asset in a bad market, especially when interest rates are still so low?

Peter Mackie, managing director of Property Vision, buying agent

The property market seems to be running ahead of the wider economic picture, which is why we have a risk that prices will soften again next year.

Lucian Cook, director of research, Savills

Prices are likely to end the year higher than at the start of 2009, but only slightly. A sustained recovery is some way off.

Jennet Siebrits, head of residential research, CB Richard Ellis

Source: Times Online

Tags: Property news