House prices continue on their ascent
BRITISH house prices continued to storm higher with official data showing that the annual decline narrowed to 4.1 per cent in September after prices rose 1.2 per cent on August.
Figures from the Department for Local Communities and Government (DCLG) revealed yesterday that UK house prices rose by 3.1 per cent in the quarter ending September 2009 compared to just 0.3 per cent for the three months to June.
The DCLG data adds to the mounting evidence that we are well past the worst in the housing market, which is widely expected to have troughed in March.
While the strengthening property market has been broadly welcomed, the inexorable rise in house prices are a continuing source of concern.
Peter Rollings, managing director at London estate agent Marsh & Parsons, said: “I almost think it is a little bit worrying. Without more stock coming onto the market, there is definitely the chance of a bubble with the buying appetite as it is.”
Recent monthly rises in house prices have been attributed to a shortage of stock on estate agents’ books as sellers lack the confidence to put their homes on the market.
However, Rollings said that sellers are now feeling more optimistic about what they can get for their house and that his firm now has 44 per cent more stock on the market than it did back in June.
However, buyers expecting a continued acceleration in house prices may be disappointed. Lombard Street Research’s Melissa Kidd said: “The current rapid rate of house price expansion is unlikely to be sustained once supply to the market eases and demand from well-endowed households is satisfied.”
She added: “Tight underlying supply conditions in the UK house building market should prevent a further downswing in prices, but total capital gains should be limited over the medium-term.”