Surprise growth in property prices

UK property prices rose by 0.9% in March, reversing some of the 1.9% fall recorded the previous month.

Nationwide’s monthly house price index revealed the typical property now costs £150,946, 15.7% less than it cost a year ago.

Nationwide welcomed the news, but said it was too early to call the bottom of the market.

Chief economist Fionnuala Earley said: “The upturn is welcome and is certainly a signal that there is some movement in the market…however it is still too soon to say that this is the beginning of sustained house price rises and a reflection of a wholesale return of confidence to the market.”

The society believes that the increase in market activity is the result of the return of those buyers who put off purchasing property at the back end of last year, when the economy was particularly turbulent and the market is traditionally slow in any case, rather than new buyers.

“Nevertheless the willingness of borrowers to return to the market is encouraging and likely in part to reflect the cost in the fall of borrowing,” Earley concluded.

Howard Archer, chief UK and European economist at IHS Global Insight, agreed that while it is important not to read too much into the surprise rise, he said "there are increasing signs that the housing market may have passed its worst point, helped by the substantial fall in house prices from their 2007 peak levels and markedly reduced mortgage rates."