UK house prices increased unexpectedly in March from the previous month, ending a long streak of uninterrupted decline that started in October 2007, while house purchase activity reached the highest level since May 2008.
The Nationwide Building Society, in its latest report on Thursday, said house prices increased 0.9% on a monthly basis in March, reversing a 1.9% fall in February. Economists were looking for another 1.5% decrease in March.
Annual decline in house prices was 15.7% in March compared to 17.6% drop in February. This brought the price of a typical house to GBP 150,946. House prices dropped by less than the annual 18.1% decline expected by economists.
Fionnuala Earley, Nationwide's Chief Economist said, Spring brought a surprise bounce to house prices in March. The moderation in the annual rate of fall was somewhat distorted by conditions last year, and so it would be unwise to draw strong conclusions from the significant slowdown in the annual rate of fall. Though increase in house prices is welcome, it is too early to consider this as evidence of house price recovery.
The Bank of England took bold measures of quantitative easing and substantial rate cuts. According to mortgage lender, it will take time for the measures taken by the central bank to work through into the housing market before they can expect sustained recovery in house prices.
Policymakers of the Bank of England had voted unanimously to reduce the interest rate by 50 basis points to a historical low of 0.5% in March.
Mortgage approvals also improved in February to a nine month high. The number of mortgages approved for house purchases totaled 37,937 in February compared to 31,791 in January, the BoE report showed earlier.
In the first quarter, house prices were down 4.2% sequentially, slower than the 4.7% decline in the last three months of 2008, the Nationwide reported. House prices plummeted 16.5% annually to GBP149,709 in the first quarter.
The mortgage lenders noted that Northern Ireland reported first moderation in price fall in two years. While, Scotland experienced sharp fall in prices during the first quarter, Wales witnessed biggest quarterly fall across the whole of the UK. London was the most expensive region.
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