Nationwide have released figures that show that the average price of a UK home rose 0.5 per cent to ?162,764 in November. This is the same rate of increase that was seen in October and is up by 2.7 per cent compared to a year ago.
Despite the increase though, it?s been slower than what was seen in the three months from August to October, which saw a 3.5 per cent rise, whereas the three months from September to November saw a 2.8 per cent rise.
The Ernst & Young Item Club said prices would fall again the first six months of next year. Hetal Mehta, senior economic adviser to the Ernst & Young Item Club, said: ?The recent house prices increases are built on shaky foundations? Weak lending points to the underlying frailty in the mortgage market and suggests that the recent increases in house prices are unsustainable. With unemployment continuing to increase, the fundamentals remain weak, and unless lending picks up, the housing market will struggle to embark on a more sure-footed recovery.?
House prices are now at the level they were in early 2006 in the build up to the bubble in late 2007 according to Nationwide.
Nationwide chief economist Martin Gahbauer said: ?The better-than-expected performance of the labour market has probably contributed to the surprise rebound in house prices. Even though workers who have been forced from full-time employment into part-time work will have experienced a reduction in income, the impact is less severe than if they had lost their jobs completely. This has meant that far fewer borrowers have fallen into arrears than would normally be the case in such a deep recession.?
