House prices recover from grim September

House prices recovered from September’s sharp falls to rise 1.8% in October, according to the latest data from the Halifax.

However, the mortgage lender said the rise didn’t presage an immediate recovery in house prices, instead saying the 1.2% fall recorded over the last three months more fairly represented the current “downward pressure” in the market.

Nevertheless the news will come as a relief to housebuilders that September’s shock 3.6% fall hasn’t been repeated. Today’s rise brings the average UK house price to £164,919, according to the mortgage lender. This leaves prices still 1.2% above the level of a year ago.

Martin Ellis, housing economist at the Halifax, said: “An increase in the number of properties available for sale in recent months, together with a decline in demand, has put some downward pressure on prices in recent months.

“We do not believe that prices are set to fall sharply over a sustained period.  Interest rates are likely to remain very low for an extended period, which will continue to support the improved mortgage affordability position for homeowners.  Low rates and stable employment levels are benefiting homeowners.”

Simon Rubinsohn, RICS Chief Economist said the rise in prices needed to be seen in the context of the very weak September number. He said: “The underlying picture is more consistent, with prices continuing to slip on a quarterly comparison and the positive year-on-year change diminishing. RICS’ forward looking indicators suggest that this softer trend in pricing is likely to continue over the coming months although, if history is anything to go by, supply of properties to the market is likely to drop in this environment. One consequence of such a development is that prices are unlikely to fall very far. More importantly, transaction activity is set to remain at relatively subdued levels.”

Nicholas Leeming, commercial director at Zoopla.co.uk, said: “This sharp rise in prices is due to low levels of mortgage lending creating volatility in the Halifax price data. What is actually happening is quite different. Many sellers are reducing prices in an attempt to secure sales before Christmas and avoid the traditional New Year rush of property coming onto the market.”