House prices bounce back, Halifax says

Julian Harris
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BRITAIN’S housing market slump may have turned a corner according to a leading house price survey released yesterday.

The average <a href="";>house price</a> rose by 1.2 per cent to £163,049 in June -- “broadly unchanged from that in December”, according to the Halifax.

On the less volatile three-month measure, prices were down just 0.5 per cent – the slimmest quarterly decline since the same time last year.

“Low interest rates, an increase in the number of people in employment and some tightening in market conditions earlier in the year are likely to have been the main factors behind the recent improvement in price trends,” said Halifax economist Martin Ellis.

Ellis believes that a gradually growing economy and more monetary easing “should help to support broad stability in the market over the coming months.”

Yet prices remain 3.5 per cent below their rate at the same time last year, when an average house cost £165,686.

A still-sluggish market continues to drive demand towards the rental market, with the costs of rent in prime London areas up 10 per cent in the past year, according to property adviser Savills.

Areas that attract City workers are seeing some of the sharpest spikes in rent, Savills said yesterday.

“In the East of City rents rose by 11.6 per cent in the past year, and by two per cent in the past three months,” it said. “Islington and Hampstead have risen 11.3 per cent over the past 12 months, though their varied client base and more limited stock levels mean that rents are now 15.2 per cent above peak.”

A slow market in housing sales has also resulted in more owners working to improve their existing homes, rather than seeking to upgrade, the Royal Institution of Chartered Surveyors said yesterday. Adding bedrooms is the most valuable addition to a home, surveyors said.