Fourth month of house price growth signals property market recovery

September marked the fourth month of consecutive house price growth, with the average property price increasing by 0.7% when compared to August 2009, according to the latest Chesterton Humberts CEBR Poll of Polls.

The average house price in England and Wales is now £169,083, which is £28,404 lower than its peak in January 2008, but a £1,142 increase since August. House prices rose across all countries and regions of the United Kingdom. Northern Ireland, which has experienced the largest fall from peak prices showed a 3.1% increase over the month to September.

The annual decline in house prices continues to ease, with prices now 5.9% lower than a year ago compared to a revised contraction of 8.9% over the year to August.

All of the four main property types experienced similar increases in prices over the month. The price of semi-detached housing rose by 0.8% in September from August, while terraced housing saw a smaller increase of 0.4% over the month. The top 20% of properties by value experienced an increase in house prices of 1.6% over the month to September, whereas, prices of the bottom fifth fell by a marginal 0.2%.

Robert Bartlett, Chesterton Humberts CEO, comments:

“This four month period of house price growth is the clearest signal yet that the property market is stablising. Prices are steadily increasing at a sustainable level, displaying an increased level of both vendor and buyer confidence.

“The regional summary illustrates the varying degrees of recovery throughout the country, with London benefitting most from foreign investors, looking to capitalise on Sterling’s current weakness, who continue to help push prices up. Throughout the country, the severe stock shortage is contributing to the steady increase of house prices, as competition for new to market properties is fierce.”

Douglas McWilliams, Chief Executive of CEBR, comments:

“This national increase disguises the mixed fortunes of the two ends of the housing market. Prices of the top 20 per cent of houses by value have increased by 1.6% over the month to September. In contrast, the lower end of the market has been relatively slow to recover, with prices of the bottom fifth of houses by value declining slightly over the month to September.

“The depreciation of Sterling, which has lost about one quarter of its value from its 2007 peak, has almost certainly helped to stimulate interest from foreign investors in the more expensive properties.  The additional cost of Home Information Packs has probably disproportionately impaired the lower end of the market.

“We expect the Bank of England to keep the official rate at historical lows until 2011 partly to counter an expected fiscal drag. This will help keep borrowing costs low and increase affordability to the benefit of home owners at both ends of the market.”

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