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House prices rise 0.9% in June

House prices increased for the second consecutive month, according to Nationwide, but there are still plenty of obstacles to a full recovery.

The average house price rose by a seasonally-adjusted 0.9% in June, from £154,016 to £156,442, according to Nationwide (www.nationwide.co.uk).

House prices are still 9.3% lower than a year ago, but this is the first time since July 2008 that the year-on-year fall has been in single digits.

Martin Gahbauer, Nationwide’s chief economist, said: “If the pattern of price movements seen in the first half of the year is repeated over the second half, then prices could only show a small single digit fall for 2009 as a whole.”

This would represent a major shift from trends seen at the turn of the year, when most indicators were pointing to a repeat of the large house price falls seen in 2008.

However, Gahbauer warned that there are still “many obstacles in the way of a genuine and sustainable price recovery.”

One of the reasons that house prices have been stabilised in recent months is a drop in the number of houses being put on the market. But these “abnormally low supply levels are unlikely to last forever,” he said.

Furthermore, he said that although estate agents have been reporting a rise in buyer interest, this has not led to large increases in transaction volumes, and it is “too early to be confident about a full-scale recovery of prices.”