Business

UK house prices see slight rise, Nationwide says

Sale signs
Image caption The house price survey is based on the Nationwide's mortgage data

House prices increased year-on-year for the first time in six months in October, with a 0.8% rise, the Nationwide building society has said.

Prices went up by 0.4% in October compared with September, making the average home worth £165,650.

But the Nationwide said the figures failed to shift the overall picture of a housing market "treading water".

"Property transaction levels remain subdued and prices essentially flat compared to last year," it said.

"The outlook remains uncertain, but with the UK economic recovery expected to remain sluggish, house price growth is likely to remain soft in the period ahead, with prices moving sideways or drifting modestly lower over the next 12 months," said the Nationwide's chief economist, Robert Gardner.

The quarter-on-quarter comparison showed prices having dropped by 0.2% in the three months to the end of October compared with the previous three months.

Declining sales

The Nationwide's figures are based on a sample of the building society's own mortgage lending.

Recent data from other sources have suggested that sales may be heading for a renewed downturn after a brief and modest revival in the spring and summer.

Completed sales fell for two consecutive months in both August and September, according to HM Revenue & Customs.

Mortgages approved for house purchase but not yet lent - a good indicator of forthcoming trends - also fell in September.

That was the first drop in five months and suggest that sales backed by a mortgage may dip further in the coming months.

"Average prices have finally recovered to where they were at this time last year," said Nicholas Ayre of property buying agency Home Fusion.

"But that can't mask the fact that the number of sales is still paltry and the market is essentially stagnant."

Andrew Montlake of mortgage brokers Coreco said: "There seems to be a two-tier system in place, with London and other high demand areas holding their value."

"We expect to see house prices continue to wander aimlessly for the foreseeable future until constraints on mortgage borrowing ease and more sellers are able to return to the market," he added.

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