Bizarre UK property price rise ‘completely at odds’ with housing data say experts
It came as a surprise to almost everyone, but property prices in the UK rose by 3.1 per cent in the last month, according to new data from the online property company Rightmove. The average price in October is £236,849, up more than £7,000 on the previous month.
Whilst this sounds like great news for homeowners, the Daily Telegraph reports that ‘despite the rise, the near-record levels of For Sale stock and deteriorating mortgage availability mean that the increase is just a blip’.
Property set for ‘a period of stagnation’
Even though the increase is the highest October rise since 2003, experts believe this rise is an anomaly. Rightmove warned that the rise could in fact be a precursor to a ‘period of stagnation’ whilst the Daily Telegraph reports that economists agree that the data was ‘completely at odds’ with other indicators about the property market.
Rightmove said: “The emotional roller-coaster of the volatile property market has taken a fresh, if not entirely unexpected, twist.”
Government cuts and lack of mortgage finance set to keep prices low
Continued cuts by the coalition government and a continued lack of access to mortgage finance are likely to keep property prices low into 2011, which is why these new figures are so surprising.
Howard Archer, chief UK and European economist at IHS Global Insight, said that the 3.1 per cent monthly rise is ‘incredibly optimistic’ and seems ‘completely at odds’ with other data that suggests the housing market is ‘on its knees’.
Mr Archer added: “Does this spike up in asking prices fundamentally change our view that house prices will trend down over the final months of 2010 and during 2011 to lose around 10pc of their value? In a word – no. There can be little doubt that many sellers are ‘trying it on’ and deliberately asking inflated prices, knowing that they will be knocked down by potential buyers who have the upper hand.”