House prices rose for the fourth month running and at their fastest monthly rate in two-and-a-half years this month, the Nationwide Building Society said yesterday, in a further sign the housing market is picking up.
The mortgage lender said house prices rose 1.6 per cent this month after a 1.4 per cent rise last month, taking the annual rate of decline down to 2.7 per cent - its smallest since April last year - from 6.2 per cent.
Analysts had forecast prices would be flat on the month, for a 4.6 per cent fall on the year.
House prices have been supported recently by a lack of homes coming onto the market, alongside a tentative pick-up in interest from people wanting to buy. Other surveys have also shown prices picking up from last year's slump.
Markets paid little heed to the figures, however, and analysts were sceptical that any improvement in the housing market would last and support consumer demand, given the ongoing broader weakness in the economy and rising unemployment.
"I'm still not convinced this marks the start of an upturn," said Peter Dixon, economist at Commerzbank. "There's still scope for a slight leg downwards, but a worse case scenario seems to have been avoided."
The average price of a home is now £160,224. Nationwide chief economist Martin Gahbauer said record low interest rates had prevented homeowners from falling into arrears with their mortgages and therefore meant fewer people were forced to sell their homes than in past downturns.
This had contributed to moving the balance of supply and demand more in favour of sellers this year, he noted.
"However, the eventual exit from exceptionally loose monetary policy could make the recovery in the housing market bumpier than some might expect after the last few months of price increases," said Mr Gahbauer.
British real estate consultant Savills posted a first-half underlying pre-tax profit of £2.5 million yesterday, well down from £19.2 million a year earlier, citing the company's diversification.
Industrial landlord Segro yesterday said its first-half pro forma net asset value fell 23 per cent, but was encouraged by the slowing rate of price falls in the UK.