House prices continue to rise

Tuesday, 10 November 2009 06:00

House prices continued to rise strongly in October although the pace of new enquiries slowed, according to surveyors.

The Royal Institute of Chartered Surveyors (Rics) said 34 per cent of chartered surveyors reported rises rather than falls in house prices, up from 20 per cent in September - the highest result since December 2006.

Transaction levels also rose, with 19 sales per surveyor over the past three months and a net balance of 15 per cent of surveyors reporting an increase in new instructions.

Rics spokesperson, Jeremy Leaf, 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."

However, the ratio of surveyors reporting an increase rather than a decrease in new buyer enquiries slipped from 35 per cent in September to 31 per cent.

Many economists believe that the current upward trend in house prices is temporary, and fuelled by a lack of supply in the market.

Howard Archer, economist for Global Insight, said: "Buyer interest has been lifted appreciably by the pretty substantial overall fall in house prices from their autumn 2007 peak levels through to their early-2009 lows and very low mortgage interest rates, and this has gradually but steadily fed through to lift housing market activity.

"Nevertheless, housing market activity is still muted compared to long-term norms, while credit conditions remain tight and economic fundamentals are still far from favourable for the housing market.

"Consequently, we suspect that house prices are likely to suffer relapses over the coming months despite their current firmer tone."

Halifax reported a 1.2 per cent rise in house prices over October, while Nationwide reported a 0.4 per cent rise.

• Tags:
• house prices
,
• news
,
• property