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House prices continue to rise

Britain’s housing market continues its recovery, with prices across the UK rising by 2.9 per cent over last year.

This compares with an annual rate of 0.5 per cent in November, which was the first positive figure since June 2008, figures from the Department of Communities and Local Government showed yesterday.

Last year prices rose by three per cent in England, 3.8 per cent in Scotland and one per cent in Wales, but fell six per cent in Northern Ireland. London saw the biggest price rises, of 4.9 per cent over the year. The average UK home cost £200,307 at the end of December, up 0.8 per cent from November. The three-month growth rate, which is seen as a better indicator of market trends, eased slightly to 2.9 per cent between October and December, from 3.1 per cent in the three months to September.

Many economists think the recovery will run out of steam in the second half of the year and warn that prices could start falling again.

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said improving mortgage availability should continue to push house prices higher in coming months. But he added: “Although things are looking better at the moment, the second half of the year is likely to be more challenging again. As a result, we suspect that the price trend is likely to stabilise and possibly turn down in the latter part of 2010.”