House prices show strongest monthly growth in five years

01/09/2009

House prices recorded their biggest monthly increase since 2004 in July, climbing by 1.7 per cent to average of £155,885, according to the latest figures from the Land Registry.

The government department said this was the third straight monthly increase after every region in England and Wales experienced a growth in property values.

Its data for May shows there were 46,699 house sales during the month - up from the 37,868 deals in April but still 34 per cent lower than the level of transactions recorded in May 2008.

The Land Registry's figures come after Nationwide's latest House Price Index showed the average cost of a home in the UK increased by 1.6 per cent to £160,224 in August.

According to the BBC, the rise in house prices and sales could be "bad news" for the rental market, as it indicates that property investors who became "reluctant landlords" during the worst of the recession are now looking to sell up.

Kevin Still, director of EuroDebt, commented: "It would appear that a number of homeowners moved out of their properties to generate rental income and downsize to rented accommodation themselves.

"Many of these homeowners are in serious financial difficulty and may now be looking to sell up and settle outstanding debts. This then has the effect of reducing the stock of homes for rent, increasing the rental costs.

"With expectations that interest rates may rise again as the recession eases, homeowners may find that the squeeze on disposable income increases again and that sale of property may become viable.

"There are still millions of people in a negative equity position and one of the key recovery indicators will be when this trend starts to reverse."

Tags; Housing Debt and Bills, Young Family Finances, Credit Card Lifestyle,

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