Belfast Telegraph

Tuesday 29 July 2014

House prices show sharp increase

House prices rose at their fastest rate for 18 months in October after a steep drop during the previous month

House prices rose at their fastest rate for 18 months in October after a steep drop during the previous month, new figures show.

The average cost of a home rose by 1.8% in October, partially offsetting September's record fall of 3.7%, according to Halifax.

But despite the increase, the group warned that the underlying trend for house prices was still downwards.

Property transactions are running at around half their normal level, and this has increased the volatility in monthly house price changes, contributing to the mixture of price rises and falls seen in 2010.

But the quarter-on-quarter change, generally seen as a smoother indicator of market trends, showed an acceleration in the rate at which property prices are dropping.

Homes lost 1.2% of their value during the three months to the end of October, the biggest quarterly decline since June 2009, although he group pointed out that the slide was well down on quarterly falls of 5% and 6% in the second half of 2008.

Martin Ellis, Halifax housing economist, said: "An increase in the number of properties available for sale in recent months, together with a decline in demand, has put some downward pressure on prices. We do not believe that prices are set to fall sharply over a sustained period. Interest rates are likely to remain very low for an extended period, which will continue to support the improved mortgage affordability position for homeowners."

The average home now costs £164,919, 6.6% above the trough reached in April 2009.

But property values have fallen by 2.3% since the start of 2010, and look set to end the year in negative territory if current trends continue.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "Does the 1.8% rebound in house prices in October reported by the Halifax significantly change our view that house prices are likely to soften by around 10% by the end of 2011? In a word, no."

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