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House prices start year with rise House prices start year with rise
(about 2 hours later)
House prices rose by 1.2% in January compared with the previous month, according to the latest survey from the Nationwide Building Society. The rate of house price increases could soon rise above 10% a year, the Nationwide building society has said.
The lift at the start of 2010 pushed up the annual increase in prices by 8.6%. Its latest survey shows that the average UK house price rose by 1.2% in January, pushing the annual rate up to 8.6%.
The Nationwide's chief economist, Martin Gahbauer, predicted that year-on-year prices would move above 10% in February. It means the average UK home now costs £163,481.
The average UK home costs £163,481, following the ninth monthly property price rise in a row. The Nationwide said prices had now been rising for nine months in a row, and the rate of increase was the fastest since October 2007.
"House prices strengthened their upward momentum at the start of 2010, increasing by a seasonally adjusted 1.2% month-on-month in January," said Martin Gahbauer, the Nationwide's chief economist.
"Unless there is a fall in property values in February, annual house price inflation is likely to move into double-digit territory next month for the first time since May 2007," he added.
The three-month on three-month rate, regarded as a less volatile measure of house prices, saw prices rise by 2.1% in January, down slightly from 2.3% in December.The three-month on three-month rate, regarded as a less volatile measure of house prices, saw prices rise by 2.1% in January, down slightly from 2.3% in December.
Economic newsEconomic news
Mr Gahbauer told the BBC the rise was "surprising given the UK economy has been in the deepest recession since the 1920s". Mr Gahbauer told the BBC the continued rise in house prices was "surprising given the UK economy has been in the deepest recession since the 1920s".
He added that people were not putting their property on the market because low interest rates were acting as a disincentive. The relative lack of supply in the housing market is one of the reasons why prices have continued to rise.
"People may have a need to move house but may be on a mortgage that has a very low rate of interest, say 2.5% for some standard variable rate deals." Mr Gahbauer explained that some people were not putting their property on the market because low interest rates were acting as a disincentive.
He said that could rise if a new mortgage was taken out for a home move. He said that their interest rate could rise if a new mortgage was taken out for a home move.
Housing affordability has been affected by the fact that wages have not increased, and in some cases have fallen. "People may have a need to move house but may be on a mortgage that has a very low rate of interest, say 2.5% for some standard variable rate deals," Mr Gahbauer said.
Yet pay restraint has prevented more people losing their jobs and, in turn, having to sell their homes. "Relatively few households have been under financial pressure to sell their homes into what remains a relatively weak demand environment," he added.
The lack of supply in the housing market is one of the reasons why prices have continued to rise. Rising sales
Many commentators have suggested that the pace of price increases may ease off this coming year.
Activity in the market has been picking up briskly since the spring of 2009.
Recent figures from HM Revenue & Customs (HMRC) showed that the number of homes sold in December jumped to a two-year high of 104,000.
This may have been influenced by buyers rushing to complete their purchases before stamp duty went up again.
Both the Bank of England and the British Bankers' Association have reported further increases in the number of mortgages being approved - a good short term indicator of future trends in the market.