British house prices rose for the second time in three months in May, slowing the annual rate of decline, according to the Nationwide building society said today.
Nationwide said the average house price rose 1.2 per cent during May, the second rise since March when house prices turned higher for the first time since October 2007. The annual rate of decline slowed from 15 per cent to a nine-month low of 11 per cent.
The mortgage lender attributed the improvement to the lack of new properties coming onto the market but cautioned that rising unemployment and restricted lending meant prices were likely to resume their downward path.
Martin Gahbauer, Nationwide's chief economist, noted that during the downturn of the early 1990s there were many months when prices rose, only to fall again.
“Although the short-term trend in house prices has clearly improved from where it was at the beginning of the year, it is still too early to say that the market is turning definitively,” he said.
“In the current downturn, the combination of rapidly rising unemployment and tight access to credit implies that the last of the price declines has probably not been seen yet."
The figures chime with other surveys in suggesting record-low interest rates have fuelled a rise in new buyer inquiries. However, mortgage lenders are still reluctant to lend to those without a significant equity cushion and figures from the Bank of England showed the country's top six banking groups scaled back lending to home owners last month.
The lack of supply may also be due to a change in legislation that requires home sellers to obtain more information before they can market their property.
Reuters