Property prices have risen by 2.6 per cent in May, according to a recent report published by Halifax in UK.
House prices have now risen for two consecutive months in the UK. This is good news for the UK property market that has been hit hard in recent months. Although the 2.6% rise in average house prices is a positive sign for the property market, property analysts say that a down turn in the property market is still far and not in sight. a 2.6% rise in house prices happens to be the largest increase in prices in the last 7 years.
The report on house prices published by Halifax bank has warned not to out too much emphasis on one or two month’s figures even though the finding follows reports from estate agents that there has been a resurgence in buyer interest. According to Halifax who published the report marking the rise in house prices, even though the average price in the year can fall in spite of a rise in house prices in some months. For example during the 1991 and 1992 period, there were 5 months where the house prices rose. Nevertheless, average house prices fell by 11 % in that year. In spite of all this, this is still some cause for celebration as it can be seen as a tentative sign that the housing market has begun to stabilise.
A report by the Bank of England adds to the positive sign displayed by the housing market stating that there were 43,201 in mortgage approvals in April. This is the highest number of mortgage approvals in a one year period. There are many factors that can be attributed to this rise in house prices. Some property analysts believe that the price has risen because there is a reduced supply pf houses for sale in the market. House prices had fallen consecutively fr many months which has made property owners wary of selling property at such low rates. In addition to this many new property development projects have been postponed till the market improves.
At the same time property analysts also point out to the fact that in the 21 months, property prices have risen in only 3 of the months.
Some property analysts argue that although recently there may have been one or two positive indications in the property market, it is tool early to expect a down turn in the market. The overall economic conditions are still bleak and unemployment is set to increase further in coming months. Property finance is still harder to receive and lenders remain cautious. First time buyers are still finding it difficult to raise finance for buying property.