Nationwide says house prices rose by 0.4% in October and 0.8% year-on-year, but the market is still treading water
House prices staged a surprise, if small, recovery in October, increasing by 0.4% despite concerns the economy might be heading back into recession.
The rise lifted house prices into positive territory for the first time in six months, leaving them 0.8% higher over the year.
Robert Gardner, Nationwide's chief economist, said: "Given the challenging economic backdrop October's data is encouraging, but it doesn't fundamentally change the picture of a housing market that is treading water. Property transaction levels remain subdued, and prices essentially flat compared to last year.
"The outlook remains uncertain, but with the UK economic recovery expected to remain sluggish house price growth is likely to remain soft in the period ahead with prices moving sideways or drifting modestly lower over the next 12 months."
Gardner said analysis of house sales showed that while there had been an increase in more affluent areas, sales had dropped in poorer postcodes.
"In particular, the proportion of house purchases in areas classified as 'wealthy achievers' has risen by three percentage points since 2008. These areas tend to be populated by those in managerial and professional occupations, and often include larger homes in suburban and rural locations," he said.
There has also been a small rise in transactions in areas categorised as "comfortably off", personifying middle Britain; but areas categorised as "urban prosperity", typically populated by well educated professionals living in major towns and cities, have seen a slight fall. Gardner said this may reflect the subdued number of first-time buyers.
Sales in areas described as "hard pressed" had fallen by two percentage points since 2008. These areas are characterised by lower levels of educational attainment and household incomes, and are often found within inner cities and post industrial towns.
Gardner said there was a correlation between housing market activity and employment, with a 6% rise in employment in professional occupations since 2008 helping to support sales in wealthy achiever neighbourhoods.
Over the same time period employment for process, plant and machine operatives fell 13%, contributing to a fall in sales in the moderate means and hard pressed areas.
House sales in England and Wales plummeted by 11% between July 2010 and July 2011, according to the latest figures from the Land Registry.
Source: http://www.guardian.co.uk/money/2011/nov/01/house-prices-surprise-rise
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