UK house prices rising

House prices higher than year ago House prices will start to plateau, the Nationwide says UK house prices were higher year-on-year in October - the first annual rise for 19 months, the Nationwide has said. Property prices were 2% higher in October than in the same month the previous year, with the average home costing £162,038. But the pace of monthly price rises has eased - going up by 0.4% - and the building society said that values could plateau in the autumn months. This could be due to more sellers returning to the market, it said. Supply The recent rises in house prices have been driven in part by the lack of properties on the market, despite more people looking to buy. Month-on-month prices were up for the sixth consecutive month in October, the Nationwide said, but it explained that a "more natural level of stock" for sale could be coming onto the market. The quarter-on-quarter data, considered a more reliable indicator of house price movements, dropped slightly from 3.8% in September to 3.4% in October. "A moderation in the rate of house price inflation was to be expected, as the very strong monthly increases seen over the summer months were unlikely to be sustainable over the long-run," said Nationwide's chief economist Martin Gahbauer. He said the prices had jumped higher than consumer expectations in recent months, which made a deceleration in price rises even more likely in the near future. Recession The UK remaining in recession had mixed implications for the housing market, Mr Gahbauer added. A deeper and longer recession would lead to higher unemployment and more constraint on workers' wages, which would put the brakes on the recovery in the housing market. However, it would mean that interest rates were likely to remain at a record low "well into next year", he said, which would keep a lid on repossession rates. "Mortgage affordability will remain relatively favourable for new and existing borrowers," he said. This scenario would assist first-time buyers if they were able to raise the deposit to secure a mortgage. Home loans have gradually become a little more accessible and competitive in recent weeks.   Source http://news.bbc.co.uk/2/hi/business/8332861.stm