House prices up higher than expected in 2009
Commenting on the figures Martin Gahbauer, Nationwide’s chief economist, said: “House prices rose by a further 0.4% in December, continuing the recent trend of moderate month-on-month increases. The 3 month on 3 month rate of change – a smoother indicator of the near term price trend – dropped from 2.8% in November to 2.1% in December, as house price increases toward the end of the year moderated in comparison to those seen in the summer.
“At £162,103, the average price of a typical UK property has ended the year 5.9% higher than at the end of 2008. Few could have foreseen this development at the start of the year, when the near term price trend was still pointing to a repeat of the double digit annual decline experienced in 2008. Although house prices are still 12.2% lower than their October 2007 cyclical peak, they have now rebounded by an impressive 8.9% since their February 2009 trough.
“Taking everything together, there is still a significant amount of fog clouding the outlook for house prices. 2009’s recovery has to some extent been driven by transitory factors and there are reasons to believe that it will lose momentum over the coming year. At the same time, there is no obvious catalyst on the near-term horizon that would trigger significant renewed falls in prices, such as a sharp spike in interest rates or a further pronounced tightening of credit conditions from present levels. At this stage, therefore, it seems likely that 2010 will see no significant house price movements in either direction. However, the experience of 2009 demonstrates how unpredictable the market is at the current juncture and that one should always be prepared for the UK housing market to surprise.”