4 May 2010

The latest figures from the Nationwide have indicated that the annual rate of house price inflation in the UK had risen by 10.5% by the end of April, the highest levels seen since June 2007.

The building society reported that the cost of the average home is now £167,802, a 1% rise during April. Despite the increase, the Nationwide did warn that the past year’s growth in price would start to level out, with sellers beginning to outnumber buyers once again.

Martin Gahbauer, the Nationwide’s chief economist, commented: “There has recently been evidence of a slight shift in the supply-demand balance. While the recovery in new buyer enquiries at estate agent offices appears to have petered out, the last few months have seen an increase in the level of new instructions from sellers. All else equal, this should lead to a gradual flattening out of the recent upward price momentum.”

Although the recovery in price is promising, the activity in the market is still relatively subdued when compared with the period before the banking crisis in 2007. The average first-time buyer is still required to put down at least a 25%, with the average deposit for these customers now over £36,000.

Gahbauer added: “The strong rebound in house prices over the last year has taken place within the context of a subdued mortgage market, with the number of mortgage advances across the industry still well down on pre-crisis ‘norms’.”

Source: BBC News

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