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HOUSE PRICES BOOM FOR SIXTH MONTH

ABOVE: House prices rose for the sixth month in a row during September

The September CLG house price figures are further proof of the ongoing recovery in the residential property market, which is virtually unrecognisable from a year ago

Catherine Penman, of Carter Jonas

10th November 2009

By Nicola McCafferty for Dailystar.co.uk

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THE housing market is continuing to boom with prices rising for the sixth consecutive month in September, according to new figures.

The 1.2 per cent jump means the average cost of a UK home has climbed to £199,303 - a level last seen in November 2008, says the Department of Communities and Local Government (CLG).

And the good news for homeowners continues with figures revealing the annual rate at which prices are falling has also eased for the sixth month in a row to 4.1 per cent - the lowest level for 13 months.

Catherine Penman, of Carter Jonas, said: "The September CLG house price figures are further proof of the ongoing recovery in the residential property market, which is virtually unrecognisable from a year ago."

Today's figures came as the Royal Institution of Chartered Surveyors (RICS) said house prices continued to rise during October, despite an increase in the number of homes being put up for sale.

The group said 34 per cent more surveyors reported seeing price rises rather than price falls during the month, the highest level since December 2006.

The increase reported by RICS came despite evidence that sellers are beginning to return to the market, with a balance of 15 per cent of surveyors reporting a rise in instructions - up from just 5 per cent in September.

The group said the upturn has been noted in every region of the UK for the first time since the credit crunch struck.

But despite this, the average number of unsold properties chartered surveyor estate agents had on their books remained broadly unchanged for the third consecutive month at 64.

Economists have said the recent strength of the housing market is due to the shortage of homes for sale and warned that, as more properties are put on to the market, prices could start to fall again.

But surveyors expect house prices to continue rising over the coming three months, with 31 per cent more expecting a rise rather than a fall in the value of property - up from a balance of 25 per cent in September.

Jeremy Leaf, RICS spokesman, said: “Although the supply of property is beginning to pick up, it is still insufficient to keep pace with the increase in demand which points to further prices gains in the near term.

“Cheap money remains a critical prop for the market and this is being reflected in the continuing appetite for finance from first-time buyers despite the large deposits still being demanded by lenders.”

Today CLG reported a slowdown in the annual rate at which house prices are falling during September in all regions of the UK except Wales and Northern Ireland, while the rate remained broadly unchanged in Scotland and Yorkshire and Humberside.

Price falls continue to be slowest in Scotland, with the average value of a home dropping by just 0.9 per cent during the year to the end of September. The greatest is in Northern Ireland at 18.3 per cent, up from an annual slide of 12.7 per cent in August.

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The Government figures also showed that first-time buyers are now paying only 1.3 per cent less for a property than they were in September 2008, although the price of homes bought by former owner- occupiers is 5.2 per cent lower.

RICS reported a further rise in transaction levels in its survey, with the average chartered surveyor estate agent selling 19 properties during the three months to the end of October, up from 18.5 during the three months to the end of September.

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But the rate at which potential buyers are registering with estate agents slowed down for the fourth month in a row.

Ed Stansfield, property economist at Capital Economics, said: “The revival of house prices continued into October, but the latest RICS survey reported that rising prices are tempting sellers back into the market. Even so, for now, it remains a sellers’ market.

“But, if the recent rise in new instructions is extended for a few more months, that could rapidly change in the early stages of next year.”