29/05/2009 - House prices stage slow recovery
A rise in house prices over the last month has been partially caused by a housing shortage, as people choose to rent out and not sell their property, an expert said.
Martin Gahbauer, chief economist at Nationwide, believes that would-be sellers have flooded the letting market and in turn this has caused a rise in property prices. House prices increased by 1.2% during May, the second time in three months that house prices have risen. The average cost of a property went up by 1% in March and only fell by 0.3% in April.
The average price of a house is now £154,016, slowing the annual rate at which property prices are falling from 15% to 11.3%. The current low interest rates and the recent price slump are also believed to be reasons why people have been tempted back onto the housing market, although Mr Gahbauer pointed out that this does not necessarily mean the hard times are over.
"Although the short-term trend in house prices has clearly improved from where it was at the beginning of the year, it is still too early to say that the market is turning definitively," said Martin Gahbauer.
Copyright © Press Association 2009
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