Despite the growing crisis over the eurozone, Britain’s housing market confounded the doom merchants and proved remarkably resilient during October, surveys from lenders and estate agents reveal.
Halifax claims UK house prices rose 1.2% in October to an average £163,300, while Nationwide Building Society reports a 0.4% rise to £165,650.
In August 2007, when the market peaked, Halifax showed an average price of £199,600, which sank to £154,700 in April 2009.
Halifax housing economist Martin Ellis says: “The housing market proved highly resilient in recent months despite the weak economic recovery and deterioration in the outlook for both the UK and global economies.
“Both prices and activity levels are expected to remain close to current levels over the coming few months.”
The Housing Market Survey from the Royal Institution of Chartered Surveyors (RICS) claims that October saw a bounce back in newly agreed sales from a low point in September - and the number of homes for sale on agents’ books also rose slightly.
Although the RICS admits that London is the only region still recording price rises, it claims that “new buyer enquiries and sales expectations appear to be edging upwards across rather more of the country.”
Market commentators are divided in their reaction to the latest statistics.
Nicholas Ayre, director of UK buying agent Home Fusion, says: “Forget the monthly figure showing a 1.2 per cent rise, which merely reflects a lack of transactions.
“The property market, like the economy, is like an engine idling. With such uncertainty surrounding the economy and unemployment, not to mention high inflation, it’s a surprise the market is proving as resilient as it is.
“More than anything, the market is being propped up by the prospect of low interest rates for at least another year, maybe even two.”
At Capital Economics, chief property economist Ed Stansfield says: “A deterioration in the labour market represents the biggest risk to the housing market outlook.
“Employment fell by 178,000 in the three months to August, the largest fall since mid-2009. Meanwhile, growth in earnings has remained well below inflation. And with surveys pointing towards a contraction in the economy in the last quarter of this year, further falls in employment look more likely than not.
“That said, given the support from low interest rates and the fact that lender forbearance for defaulting borrowers shows few signs of easing, judging the impact of rising unemployment on house prices is difficult. We think a price drop of at least five per cent next year looks very plausible.”
Stuart Law, at property investment specialist Assetz, adds: “House prices have basically gone nowhere in 18 months – London is up substantially, the rest of the country down a similar amount.
“We are currently in a small upturn, which might be boosted by the latest round (£75 billion) of quantitative easing. We are forecasting a rise of three per cent in 2012, but basically more of the same, perhaps with a little more stability.”