House prices continued to rise last month, says the latest report from Nationwide, as results for November showed an increase on par with that in October. Property prices rose by 0.5% last month to £162,764 putting the average price of a typical property 2.7% higher than a year earlier and at a similar level to early 2006. The three-month-on-three month rate has now dropped to 2.8% from 3.5% in October which suggests prices are now going up at a more moderate pace than they were earlier this year.
Nationwide explains this continued rise in prices as a result of the relatively good performance of the labour market alongside falling mortgage rates which have limited the numbers of distressed sales.
Other commentators agree that house prices are linked to the jobs market and predict a sticky 2010 for both. Ed Stansfield from Capital Economics says: ‘While it is possible to envisage a scenario in which the lack of stock for sale continues to support prices for much, if not all, of next year, that is not our central expectation. We think that 2010 will bring significant further job losses and the resulting rise in unemployment will trigger renewed house price falls next year.'
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The Royal Institute of Chartered Surveyors expects the lack of supply to continue to support the market into 2010, to some extent at least. A spokesman said: ‘A key driver of the rebound in prices has been the lack of new instructions coming onto the market. However, there are now a few signs that this is changing with the latest RICS Housing Market showing a little more property being registered with estate agents. The modest increase in supply could help to explain why there has been some slackening in the pace of price gains over the past few months. Nevertheless, the imbalance between buyer interest and the available stock of property is still sufficiently large to point to further price increases into the New Year.
‘The housing market will face a number of challenges in 2010 including the imminent removal of the extended zero rate band of stamp duty and the prospect, at some point, of an increase in base rates from the current emergency level which has helped to keep the cost of mortgage finance so low for many homeowners.'
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