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Homes 'may rise in value in 2009' Homes 'may rise in value in 2009'
(about 3 hours later)
The UK's largest building society believes there is a "reasonable chance" that house prices could end the year higher than they started 2009.The UK's largest building society believes there is a "reasonable chance" that house prices could end the year higher than they started 2009.
Such an outcome was "unthinkable" a few months ago, the Nationwide's chief economist said.Such an outcome was "unthinkable" a few months ago, the Nationwide's chief economist said.
The Nationwide's latest house price survey showed prices rose by 1.3% in July compared with the previous month.The Nationwide's latest house price survey showed prices rose by 1.3% in July compared with the previous month.
The average UK home costs £158,871, with the annual rate of property value falls slowing sharply to 6.2%, it said.The average UK home costs £158,871, with the annual rate of property value falls slowing sharply to 6.2%, it said.
The three-month on three-month comparison of property prices - considered a less volatile measure than the monthly data - rose from 1% in June to 2.6% in July.The three-month on three-month comparison of property prices - considered a less volatile measure than the monthly data - rose from 1% in June to 2.6% in July.
This was the highest level seen since February 2007, when the housing market was booming.This was the highest level seen since February 2007, when the housing market was booming.
'Buyers' pool''Buyers' pool'
Property values in July were 6.2% lower than the same month a year earlier, but this was a significant deceleration compared with the 9.3% annual house price fall seen in June.Property values in July were 6.2% lower than the same month a year earlier, but this was a significant deceleration compared with the 9.3% annual house price fall seen in June.
It is unlikely the price increases can be sustained for long at the very strong rate observed over the last few months Martin Gahbauer, Nationwide chief economistIt is unlikely the price increases can be sustained for long at the very strong rate observed over the last few months Martin Gahbauer, Nationwide chief economist
"House prices have been remarkably resilient so far this year, despite a recessionary economic background with sharply rising unemployment," said Martin Gahbauer, Nationwide's chief economist."House prices have been remarkably resilient so far this year, despite a recessionary economic background with sharply rising unemployment," said Martin Gahbauer, Nationwide's chief economist.
This "correction" was a response to the sharp decline in activity in the housing market at the height of the banking crisis last autumn, he said.This "correction" was a response to the sharp decline in activity in the housing market at the height of the banking crisis last autumn, he said.
Mr Gahbauer said there had been a pool of prospective buyers who had been "ready and able" to buy during the credit crunch but had been put off by the uncertainty in the economy.Mr Gahbauer said there had been a pool of prospective buyers who had been "ready and able" to buy during the credit crunch but had been put off by the uncertainty in the economy.
When the worst of the crisis was over, or averted, these buyers came back to the housing market, encouraged by low interest rates.When the worst of the crisis was over, or averted, these buyers came back to the housing market, encouraged by low interest rates.
The rise in demand and activity coincided with few properties being put up for sale, and so prices bounced upwards, he said.The rise in demand and activity coincided with few properties being put up for sale, and so prices bounced upwards, he said.
Lasting rise?Lasting rise?
The rise in prices would be stunted owing to the squeeze on earnings and rental income, and the rise in unemployment, he warned.The rise in prices would be stunted owing to the squeeze on earnings and rental income, and the rise in unemployment, he warned.
"It is unlikely the price increases can be sustained for long at the very strong rate observed over the last few months," he said."It is unlikely the price increases can be sustained for long at the very strong rate observed over the last few months," he said.
A rise in mortgage approvals for house purchases, revealed by the Bank of England earlier in the week, signalled greater activity in the housing market in the coming months.A rise in mortgage approvals for house purchases, revealed by the Bank of England earlier in the week, signalled greater activity in the housing market in the coming months.
In the short-term, the supply of homes for sale was determined by issues such as consumer confidence and job security, but construction was key over the long-term, said Mr Gahbauer.In the short-term, the supply of homes for sale was determined by issues such as consumer confidence and job security, but construction was key over the long-term, said Mr Gahbauer.
An estimated 100,000 homes are being built in 2009, a record low. This is far below the increase in the number of home-seekers, owing to migration and greater life expectancy.An estimated 100,000 homes are being built in 2009, a record low. This is far below the increase in the number of home-seekers, owing to migration and greater life expectancy.
"Over time, these shortages are detrimental to housing affordability and can contribute to future instability of prices," he said."Over time, these shortages are detrimental to housing affordability and can contribute to future instability of prices," he said.
On Monday, the government announced that hundreds of housing developments in England that had stalled during the recession were set to share in a £925m attempt to kick-start the industry.On Monday, the government announced that hundreds of housing developments in England that had stalled during the recession were set to share in a £925m attempt to kick-start the industry.
About 270 projects could benefit from the cash, the government said, with a third of the funds to go to housing associations to build affordable homes.About 270 projects could benefit from the cash, the government said, with a third of the funds to go to housing associations to build affordable homes.