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April 29, 2010    

House prices up 10.5% on the year

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by Gill Montia

House prices increased by 1% month-on-month in April, according to Nationwide’s latest house price index.

The annual rate of inflation moved into double digits for the first time since June 2007, to 10.5% (up from 9% in March), taking the value of the average home to £167,802 or 10% below its October 2007 peak.

However, the smoother three-month-on-three-month rate of change edged down further from 1.5% in March to 1.1% in April, primarily reflecting the impact of February’s 1% decline in house prices.

The building society’s chief economist, Martin Gahbauer, points out that this month’s figures received an additional boost from the fact that April 2009 was one of the weaker months of last year.

He also mentions that, given the very strong performance of house prices from May 2009 onwards, it will take monthly increases of over 1% for the annual rate of inflation to remain in double digits going forward.

According to Mr Gahbauer, an important driver of rising house prices has been the low level of stock for sale and on this point both the Royal Institution of Chartered Surveyors and housing intelligence firm, Hometrack, have reported a recent shift in the balance of supply and demand.

Research from Hometrack shows the number of new buyers registering with agents rising by 1% in April, the smallest increase so far this year, while growth in new instructions stood at 3.7%.

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