House prices made a surprise comeback in March with an increase of 0.9 per cent, the latest Nationwide House Price Index has revealed.
The monthly study found that house prices shot up from an average of £147,746 in February, to an average of £150,946 in March, bringing the annual fall in house prices up from -17.6 per cent to -15.7 per cent.
However, the surprise increase should be heeded with caution, says Fionnuala Earley, Nationwide's chief economist: "Equally, while the rise in prices in March is welcome, it is far too soon to see this as evidence that the trough of the market has been reached.
"The Bank of England has already taken strong measures to ease the tensions in economic and financial markets by cutting rates and commencing quantitative easing. However it will take time for these to work through into the housing market before we can expect a sustained recovery in house prices," she added.
According to Ms Earley, as the number of mortgage
approvals continues to increase, according to data from the Bank of England, the sales-to-stock ratio – which is a good indicator of movement in house prices – has begun to stabilise.
"However, it is still too soon to say that this will be the beginning of sustained house price rises and a reflection of a wholesale return of confidence to the market," she said.
Adding that the fall in mortgage rates
could have something to do with the price rise, Ms Earley said: "The current upturn in activity is therefore more likely to reflect the return of buyers who have delayed purchasing through the worst of the financial turbulence at the end of 2008 rather than the beginnings of a swift recovery.
"Nevertheless, the willingness of borrowers to return to the market is encouraging and likely to in part reflect the falling cost of borrowing."
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