Economic News

LONDON (ShareCast) - UK house prices rose for the third month in four in June, with Nationwide, which compiled the figures, describing the numbers as a "welcome surprise".

Prices rose by 0.9% in June, cutting the annual rate of decline to 9.3%, from 11.3% in May. An average home in the UK now costs £156,442, £15,973 less than a year ago.

"House prices have now risen in three of the last four months, suggesting that the improvement that began to show up in March represents more than just statistical noise," said the Nationwide's economist Martin Gahbauer.

"What is unusual about the recent trend reversal, however, is that it has taken place against a background of transactions activity that is still very low by historical standards," he added.

The trends shows an upward move even on a three-month comprison, Gahbauer said. On that basis, prices were now 0.9% higher, the first time they have been on an upward trend since December 2007.

If the current trend continues, this year would end with prices down by only "small single digits", the Nationwide added, which would represent a "stark shift from trends seen at the turn of the year, when most indicators were pointing to a repeat of the large declines seen in 2008," it said.

Howard Archer, chief economist at IHS Global Insight, cautioned about interpreting too much into the figures, though he added even if prices did turn down again this year, it would not be by the 10% he had previously predicted.

Nationwide also added a degree of caution. "The enquiry pipeline has not yet led to large increases in transaction volumes, because credit criteria remain significantly more restrictive than in the years leading up to the downturn," said Mr Gahbauer.

"Rising unemployment and associated job insecurity are also limiting the extent to which enquiries can translate into actual transactions," he added.

Other house price surves have also started to tick up recently, but the most comprehensive figures, from the Land Registry, showed that prices fell in May.