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Prices continue in the right direction

By: Ray Edwards

Published: 10:09, 19 August 2011

Property signs

According to Assetz, average house prices raised steadily from £195,425 in January to £198,908 in June.

The investment firm specialising in property put an analysis of the data of five leading house prices indices - Nationwide, Halifax, Communities and Local Government, Rightmove and LSL Acadametrics.

That's a rise of £3,483, or 1.8% since the start of the year, although it admits that over a full year, prices have actually slipped by 1.2%.

Assetz says that all the annualised average rates of growth continue to point to increasing market stability, with the annualised monthly growth now at 3.3%, the six-month annualised rate at 3.5% and the three-month rate of growth at 2.3%.

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Stuart Law, Assetz chief executive, said: "The latest GDP figures show that economic conditions are faltering but still positive with a strong services sector, falling unemployment and strengthening house prices combining to present a brighter economic outlook than at the start of the year.

"Looking at all the house price data together, the overall trend is clearly one of positive growth in the last six months, with pent-up demand from people who need to move and the rapidly growing appetite of buy to let investors supporting price growth."

Mr Law thinks bricks and mortar will become increasingly attractive as fears grow of global economic problems in the wake of the Euro bailout and the US debt agreement.

"There is no other choice of investment currently available to investors which is as safe and producing such a strong income as buy to let, with eight% gross yields being achieved in some regional cities.

"The availability and interest rates of mortgages are also improving each month, steadily reversing the finance famine which prevented an earlier recovery."

Several lenders, including Yorkshire BS, Barclays, Abbey, NatWest, Halifax, Northern Rock, Leeds BS and RBS have all announced reductions in fixed rate deals in recent weeks, making borrowing even more affordable.

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Mr Law said: "Improving market conditions could be jeopardised, however, if the Bank of England refrains from raising interest rates in a slow and measured fashion.

"It was too slow to reduce rates going into the recession, which led to a series of rapid rate reductions in an attempt to stimulate the economy. Its failure to raise rates now could lead to panicked rises in 2012 or 2013 to combat inflation, which would have a serious impact on consumer affordability and confidence."

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