Property market may be stabilising as house prices rise

There’s more hope that the property market may be stabilising as house prices rose 0.9% in June, according the latest Nationwide Monthly House Price index.

As Martin Gabhauer, Nationwide’s Chief Economist, said ‘House prices have now risen in three of the last four months, suggesting that the improvement that began to show up in March represents more than just statistical noice.’

However, the average house price across the UK stands at £156,442, over 9% lower than a year ago.

House prices are beginning to stabilise even though there is low house buyer demand.

This is simply as a result of the lack of property for sale coming onto the market.

Can this stability in house prices though be maintained as more property comes on for sale?

There’s no doubt the volume of property for sale will increase  – some sellers will start to feel more confident about selling, others will be forced to sell due to changes in their personal circumstances.

Unless there’s an increase in demand though, more property available may put more pressure on house prices again.

But demand may be affected by the ‘house affordability’ factor.

If interest rates start rising again soon, as many predict, this could negatively impact on whether people can afford to buy property.

Many fixed rate mortgages have already seen their interest rates rise over the last few weeks.

This could throttle demand, leading to property not selling which could again put pressure on prices.

There are clearly many factors which could easily hit a very fragile housing market.

As Martin Gabhauer comments ‘there are still considerable headwinds facing the demand side and until we see a more robust recovery in house purchase activity, it is too early to be confident about a full-scale recovery of prices.’