Price rise aids signs of revival in housing

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The Independent Online
Evidence of the housing market's gradual revival will be given fresh backing later this week as two surveys, by Halifax and Nationwide building societies, look set to show that prices rose in April.

Nationwide is expected to say tomorrow that house prices rose by about 1 per cent this month, following a flat market in March. Halifax's own index is also thought likely to show an increase of up to 1 per cent in April.

The monthly survey by Halifax, due on Thursday, will be the ninth in a row that its index has risen. Over the past 12 months, it is expected to show that house prices have gone up by about 1.5 per cent.

Both announcements will help calm market nerves in the wake of disappointing figures from the Inland Revenue last week, showing that the number of homes changing hands dipped slightly to 89,000 in March, roughly the same level as last year.

Rob Thomas, an analyst at UBS, the Swiss banking group, said yesterday that if the expected house price figures were true, he would begin revising up his own expectations for the year, from 2 to 4 per cent.

He said: "The problem with the Revenue figures is that they show a considerable time lag. They record transactions that would have taken place two months earlier but have only just been recorded in the Land Registry.

"It is too early to say what the level of transactions are at present. Anecdotal evidence suggests that house sales are higher than they were this time last year, but figures on the amounts lent by banks and building societies for home purchases are still not all that good."

Mr Thomas added: "The danger is that if more transactions do not take place it is likely to have a dampening effect on the market. However, if prices continue to edge up slightly over the next two or three months, there is no reason why 4 per cent is not achievable over the full year."

A Halifax spokesman agreed that house prices showed signs of going beyond the 2 to 3 per cent predictions made by the society at the end of last year.

"The danger is that there may be a reverse in May," he said. "That is the point when, on the basis of past evidence, the housing market is strongest. Once we have the figures for that month, it should be possible to forecast what is happening to the market with a little more certainty."

Nationwide said: "Our index has not recorded the straight increases seen by the Halifax in the past nine months. We have gone down as well as up and there have been a couple of flat months.

"It could be that people are still holding back to make sure that the market has stabilised completely. Unless you are sure, you are unlikely to want to commit yourself to a house purchase."