House prices up but 'too early' to call end to crash

Average cost of home rises for first time in 16 months but year-on-year values still down

Nationwide said the cost of a home rose by 0.9 per cent, raising the price of the average property from £147,746 to £150,946. The rise was the first recorded by the building society for 16 months and slowed year-on-year property deflation from minus 17.6 per cent to minus 15.7 per cent.

Nationwide's chief economist Fionnuala Earley and other commentators nonetheless warned that it was too early to call an end to the house price crash.

"The Bank of England has already taken strong measures to ease the tensions in economic and financial markets by cutting rates and commencing quantitative easing," she said.

"However it will take time for these to work through into the housing market before we can expect a sustained recovery in house prices."

Nationwide's survey follows other positive news on the housing market, coming just days after the Bank of England said mortgage approvals jumped by 19 per cent in February.

The Royal Institution of Chartered Surveyors said that interest from potential buyers rose for the fourth month in a row during February while the property intelligence group Hometrack reported a slowing in the rate of house price falls during March and higher sales.

The Nationwide said March's upturn in activity was likely to reflect the return of buyers who had delayed purchasing a home during the worst of the financial turbulence at the end of 2008.

As if to underline the impact of the existing falls, it released a geographical breakdown of the property crash, showing which areas had been hit hardest. Prices in England fell by 17.6 per cent in the South and by 15.7 per cent in the North in the 12 months to March.

Northern Ireland fell the most,by 29 per cent, year on year. Scotland lost 12.6 per cent and Wales was down 8.3 per cent, year on year.

"It is important not too read too much into March's rise in house prices," said Howard Archer, the chief UK and European Economist at IHS Global Insight. "Nevertheless, there are increasing signs that the housing market may have passed its worst point. However, housing market activity remains extremely low and any pick-up in activity over the coming months is likely to be gradual and fitful."

Seema Shah, a property economist at Capital Economics, also expressed caution. "The surprise rise in house prices in March does not mean that the housing market correction is finished," she said. "Monthly house price indices are volatile, so one month's increase is likely to be a blip in the underlying downward trend. What's more, with the economy contracting sharply and lending criteria still tight, downward pressures on house prices remain strong."

Simon Rubinsohn, the chief economist at Rics, remarked "the housing market may now be out of intensive care", but added that it remained some way short of normality.

Prospective buyers waiting for the market to bottom out before putting in an offer might feel the time had come, suggested Louise Cuming, the head of mortgages at moneysupermarket.com.

"So news such as this might prove to be the catalyst that gets the wheels of the mortgage industry turning again," she said. "There is always a need for caution when making predictions about the housing market," she said.

"These figures may prove to be anomalous, but equally they may show that some measures taken by the Government and the Bank Of England have started to pay dividends. Only time will tell," Ms Cuming added.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones