House prices up in March

| March 31, 2011
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The first of the March house price surveys shows the value of the average home up 0.5% during the month, to A?164,751, taking the annual rate of inflation to 0.1%.

According to Nationwide, prices have now increased modestly in three of the past four months, with the three-month-on-three-month measure (regarded as a better indicator of the underlying trend) up 0.6%.

However, the building societya��s chief economist, Robert Gardner, is not expecting a strong return to growth.

He explains: a�?With the economic recovery expected to remain sluggish, the most likely outcome is that the property market will follow suit, with low transaction levels and prices moving sideways or modestly lower through 2011.a�?

Mr Gardner also expects homeowners to face interest rate rises this year and warns that these may exert more of a “drag” on households than would have been the case before the recession.

According to the economist, mortgages account for around 85% of household debt and since 2008, the proportion of mortgages on variable interest rates has risen sharply, to 62%.

A typical repayment mortgage currently costs around A?455 per month but should the Bank Rate return to its pre credit crisis average of 4.5% typical payments could increase to A?621.

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