Scottish Property News

UK house prices climb 1.6 percent over month.

UK house prices surged by 1.6per cent during September alone, according to a survey yesterday from mortgage lender Halifax which provided further evidence that some solidity is returning to the residential property market.

This seasonally-adjusted rise was the third consecutive monthly increase and means the average UK house price has increased by 2.8 percent in the third quarter of this year. It is the first quarter-on-quarter increase for two years and the biggest since early 2007.

House prices in the three months to September were 7.4 percent lower than in the same quarter of last year. However, this is much less than the 17.7 percent year-on-year decrease recorded in the three months to April.

Halifax noted the average UK house price was now 1.7 percent higher than at the end of last year. The average price now stands at GBP163,533.

Martin Ellis, housing economist at Halifax, said: "The combination of increased demand and a low level of properties available for sale has pushed up house prices in recent months. The marked improvement in affordability due to the reduction in both property prices and interest rates since mid-2007 has been a key factor in stimulating higher demand."

The Bank of England has slashed UK base rates from 5 percent last October to a record low of 0.5 percent.

But Ellis appeared at pains not to get carried away in the wake of the recent improvement in house prices.

He said: "Continuing increases in unemployment and low earnings growth are likely to constrain the rise in demand. There are also some signs that the improvement in market conditions is encouraging more people to put their properties up for sale. This development could loosen market conditions by alleviating the current shortage of supply and curb the pace of house price growth."

Howard Archer, chief UK economist at consultancy IHS Global Insight, noted the recent rise in property prices meant "affordability pressures are now moving back up at a time when still weak economic activity, sharply rising unemployment and low wage growth is negative for the housing market".

He said: "Meanwhile, it continues to be very difficult for many people to get mortgages - particularly first-time buyers - and this situation seems likely to improve only gradually.

"On the positive side, interest rates seem unlikely to rise for some considerable time."