House prices rocket
House price growth has surged into double figures for the first time in almost three years, although the rocketing rate of growth is unlikely to last for long.
The annual rate of house price inflation stood at 10.5% at the end of April, its first double digit rise since June 2007.
Figures from Nationwide reveal that property prices climbed by 1% in April with the value of the average home now standing at £167,802.
This matched the upwardly revised monthly gain of 1% in March, which had countered the 1% dip in prices in February.
Today’s figures suggest that confidence is returning to the market although the recovery still has a long way to go.
The quarterly rate of growth stands at just 1.1% higher than in the preceding three months - the slowest rate since June last year.
Nationwide says the current rebound in prices is due to higher demand for low levels of properties on the market rather than stronger sales levels.
These are likely to dip in the coming months as more properties come onto the market.
Martin Gahbauer, chief economist at Nationwide, says: "There has recently been evidence of a slight shift in the supply-demand balance.
"While the recovery in new buyer enquiries at estate agent offices appears to have petered out, the last few months have seen an increase in the level of new instructions from sellers.
"All else equal, this should lead to a gradual flattening out of the recent upward price momentum."
He adds that it will take monthly increases of more than 1% to keep the annual rate of inflation in double digits going forward.
Howard Archer, chief UK and European economist at IHS Global Insight, says: "While house prices have firmed anew after dipping in February, it still remains highly questionable whether they can make significant further gains over the coming months.
"Housing market activity appears to have lost some momentum overall so far in 2010, the economic fundamentals are still far from robust for the housing market, credit conditions are still pretty tight, and house price/earnings ratios have moved back up.
"Meanwhile, more properties are coming onto the market thereby moving the supply/demand balance more in favour of buyers," he concludes.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).
Everything you own: all your assets (property, cars, investments, savings, insurance payouts, artwork, furniture etc) minus any liabilities (debts, current bills, payments still owed on assets like cars and houses, credit card balances and other outstanding loans). When you’re alive this is called your wealth; when you’re dead, it becomes your estate.