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Rise reported in UK house prices Rise reported in UK house prices
(about 1 hour later)
House prices rose 1.2% in May offering evidence of activity in the UK housing market, according to figures from the Nationwide building society. House prices rose 1.2% in May on April, offering evidence of activity in the UK housing market, according to figures from the Nationwide building society.
The annual rate of house price falls eased from 15% in April to 11.3%, with a typical home now costing £154,016.The annual rate of house price falls eased from 15% in April to 11.3%, with a typical home now costing £154,016.
Over the past three months house prices fell by 0.5% compared with the previous three-month period, the lowest quarterly drop since January last year. Over the past three months, house prices fell by 0.5% compared with the previous three-month period, the lowest quarterly drop since January last year.
But it was too early to report a turn in the market, Nationwide said.But it was too early to report a turn in the market, Nationwide said.
"During the downturn of the early 1990s, there were many months during which prices rose, only to fall back down again in subsequent periods," said Nationwide's Chief Economist Martin Gahbauer. "During the downturn of the early 1990s, there were many months during which prices rose, only to fall back down again in subsequent periods," said Martin Gahbauer, Nationwide's chief economist.
"In the current downturn, the combination of rapidly rising unemployment and tight access to credit implies that the last of the price declines has probably not been seen yet.""In the current downturn, the combination of rapidly rising unemployment and tight access to credit implies that the last of the price declines has probably not been seen yet."
Changing dynamics Low supply
Mr Gahbauer pointed out that changes in house prices depended on the balance between the demand from buyers and supply from sellers. Fewer properties are coming onto the market as many sellers choose to rent their properties to tenants, rather than try to sell them in a depressed market.
It is still too early to say that the market is turning definitively Martin Gahbauer, Nationwide Chief Economist class="" href="/1/hi/business/8071659.stm">Downward trend in UK rents 'ends' This has helped stabilise the ratio of sales to the unsold stock of properties on estate agents' books, Mr Gahbauer said, leading to some of the price rises in recent months.
The ratio of sales to the unsold stock of properties on estate agents' books had stabilised, he said, leading to some of the rises in house prices in recent months. Other reasons for the price rises could include potential sellers holding back, fearing that they would not be able to get the price they wanted in the current economic conditions, and fewer homes being built.
This was the result of fewer properties coming onto the market as many sellers chose to rent their properties to tenants, rather than try to sell them in a depressed market.
Other reasons could include potential sellers holding back, fearing that they would not be able to get the price they wanted in the current economic conditions, and fewer homes being built.
But he added that this low level of supply could not last indefinitely.But he added that this low level of supply could not last indefinitely.
More landlordsMore landlords
Potential sellers would not be able to hold off for long if they had suffered a cut in income with the number of people out of work rising. Potential sellers might not be able to hold off for long, particularly if they have lost their job and their income has fallen.
This volatility is typical of a housing market dragging along the bottom and mirrors the testing economic conditions David Smith, Carter Jonas class="" href="/1/hi/business/3132863.stm">House price surveys explained class="" href="/1/hi/business/8069709.stm">Uncertainty 'keeps borrowing low' Reports of increased interest from new buyers might also tempt some potential sellers back into the market, he said.
Reports of increased interest from new buyers might also tempt some of these potential sellers back into the market in the coming months, he said. The surge in "reluctant landlords" has meant that the level of rent landlords can charge has fallen.
And the surge in "reluctant landlords" meant that the level of rent that homeowners who let out their properties were able to demand had been squeezed. This volatility is typical of a housing market dragging along the bottom and mirrors the testing economic conditions David Smith, Carter Jonas class="" href="/1/hi/business/3132863.stm">House price surveys explained class="" href="/1/hi/business/8069709.stm">Uncertainty 'keeps borrowing low' class="" href="/1/hi/business/8071659.stm">Downward trend in UK rents 'ends'
He said that trends in the rental market were worth watching closely, given their impact on the supply of homes for sale.
The latest figures from property website Findaproperty.com - released on Thursday - suggested that typical UK rents had remained unchanged in May at £819 a month after nine consecutive months of falls.The latest figures from property website Findaproperty.com - released on Thursday - suggested that typical UK rents had remained unchanged in May at £819 a month after nine consecutive months of falls.
All these factors could affect the future picture for house prices, Mr Gahbauer said. What happens with UK rents could affect house prices, Mr Gahbauer said, if landlords - pressured by low rent - put their houses on the market.
"If the supply of homes onto the market does increase, the recent moderation in the pace of house price falls may not be sustained," he said."If the supply of homes onto the market does increase, the recent moderation in the pace of house price falls may not be sustained," he said.
However, if this was outweighed by increases in demand then the trend of house price falls decelerating could continue.
"For the moment, however, it is unclear how the balance between supply and demand will ultimately work through in the coming months," he said."For the moment, however, it is unclear how the balance between supply and demand will ultimately work through in the coming months," he said.
"It is still too early to say that the market is turning definitively.""It is still too early to say that the market is turning definitively."
Operators in the housing market have reported some increased activity in the housing market, but they have given the latest figures a guarded welcome. Low lending levels
Estate agents and others have given the latest figures a guarded welcome.
"The rollercoaster ride for house prices continues. Up in March, down in April, back up in May," said David Smith, senior partner at property consultancy Carter Jonas."The rollercoaster ride for house prices continues. Up in March, down in April, back up in May," said David Smith, senior partner at property consultancy Carter Jonas.
"This volatility is typical of a housing market dragging along the bottom and mirrors the testing economic conditions.""This volatility is typical of a housing market dragging along the bottom and mirrors the testing economic conditions."
Some estate agents have reported an increase in activity among first-time buyers, but levels of lending still remain low and young people wanting to get on the property ladder face having to put down a large deposit. Some estate agents have reported an increase in activity among first-time buyers, but levels of lending still remain low and people, especially first-time buyers, still need a large deposit.
Figures from the British Bankers' Association this week revealed that net mortgage lending by the UK's major banks was £2.7bn in April, the lowest level for eight years.Figures from the British Bankers' Association this week revealed that net mortgage lending by the UK's major banks was £2.7bn in April, the lowest level for eight years.
Andrew Montlake, director of mortgage broker Coreco, said: "First time buyers should not be unduly worried at this point, as there is a good chance prices will fall again slightly in the quieter summer months.
"However, anyone seriously considering getting onto the property ladder needs to commit in the next six to nine months or they could well miss the bottom."