House prices rise again

The average UK home gained 1.4% in value in the month of October.

According to the Halifax House Price Index, prices rose for the fourth consecutive month to an average of £165,528, a 7.1% increase on their lowest point recorded in April this year.

Martin Ellis, Halifax housing economist, said:

“Demand for houses has risen in recent months due to the very low level of interest rates, the decline in property prices since the summer of 2007 and a pick-up in consumer confidence on the back of better economic news.”

Industry figures welcomed the news. Paul Hunt, MD of Phoebus Software said:

“It’s been a bumpy ride but now the tarmac’s beginning to smooth. This is another very important step forward. Indicators are beginning to agree - a sustained recovery is now very possible. The consumer confidence index shows optimism on the increase.

"Although the UK is officially still in recession, the manufacturing sector is now growing again. Most commentators expected house prices to be flat until the end of the year. Prices have been rising for months now."

However, some questioned whether the rate of recovery in the housing market is sustainable given the continuing lack of mortgage funding for many people.

David Whittaker, managing director of Mortgages for Businesses, said:

“These figures give us another reason to be cheerful and further strengthen the idea of a sustained recovery in the market. Prices are rising the equivalent to 15% annually. Whether prices continue to rise at this pace is another question altogether.

“Mortgage finance remains difficult to secure and if this persists it is likely we’ll see the recovery stall, if not reverse in the medium term. While a lack of finance means more tenants for landlords, sustained recovery in house prices is much more beneficial for everyone, across the market. Let’s hope lenders agree and begin to loosen the purse strings.”

Others pointed out that the rise in house prices looks good but is actually the result of a lack of supply of properties for sale.

James Hyman, Partner for Residential Sales at property consultants Cluttons, said:

"It is encouraging to see the latest Halifax house price figures supporting those of many other commentators and showing that house prices increased once again in October. However, the price recovery is mainly due to the supply crisis and will not last forever."