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June 30, 2010    

Nationwide: house prices up 0.1% in June

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by Gill Montia

UK house prices managed a 0.1% rise in June, compared with a month earlier, taking the average value of a home to £170,111, according to Nationwide.

A flurry of new instructions following the abolition of Home Information Packs may have slowed the rate of gain, which fell back from 0.5% in May.

The smoother three-month-on-three-month measure increased marginally from 1.7% in May to 1.8% in June, but the annual rate of inflation dropped back from 9.8% to 8.7% and is expected to drift lower.

The building society’s figures also show house prices rising by a cumulative 3% over the first half of 2010 but the lender warns that the squeeze on household disposable incomes from this month’s emergency Budget limits the scope for property prices to maintain the level of growth seen over the last year.

However, the Nationwide’s chief economist, Martin Gahbauer, believes that continued low interest rates “should provide some offsetting support to households and mortgage affordability”.

Mr Gahbauer concludes: “Provided the economy does not suffer a relapse into recession, the net impact of the Budget on the housing market and house prices should be relatively neutral.”

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