House prices rise, but Nationwide warns not to get too optimistic.

According to the latest report from Nationwide Building Society, UK house prices have risen for the second time in three months, up by 1.2% in May.

The average house price is now £154,016, up from £151,861 in April. Although this is 11.3% down on the same time last year, it does show an improvement on the annual decline of 15% recorded in April.

However, Martin Gahbauer, Nationwide’s Chief Economist warned that it was still too early to say if this stabilisation is set to stay: “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.

“During the downturn of the early 1990’s, there were many months during which prices rose, only to fall back down again in subsequent periods. 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 building society said that there is evidence to suggest that buyer interest had picked up strongly in response to lower prices and lower interest rates – possibly suggesting the Monetary Policy Committee had made some significant progress following the decisions to drop the Bank of England base rate to a record low level. 

The report from Nationwide, offers a slightly different view to that of the Land Registry, which released its April figures today (1 June). It announced a monthly fall of 0.3%, bringing the annual drop to 16.2%.