UK Property Prices - Biggest Monthly Increase in Six Years - May 09

Halifax, the UKs largest mortgage lender has reported the biggest increase in property prices (monthly adjustment) in six years, in the month of May.  They have reported a monthly increase of 2.6% although this is set against strong annual falls.

With the recent Bank of England decision to leave interest rates unaltered at 0.5%, the influence on pricing seems to be taking some effect.  The Nationwides monthly report also supported a strong month for house prices. 

Although it is important not to assume that this is the turning point in the market, clearly this was a very positive step.  It must be remembered that in previous property declines, there were positive blips in the decline before the bottom of the market was reached.  The Halifax have drawn attention to the fact that this increase was on the back of three substantial falls and so was a sudden and therefore, perhaps uncertain, turn in the pricing trend.

Nitesh Patel, a Halifax economist said: "It is always important not to place too much weight on any one month's figures, historically, house prices have not moved in the same direction month after month even during a pronounced downturn. For example, prices fell by 11% nationally during 1991 and 1992, but there were five monthly price rises in this period. House sales remain substantially below their long-term average and market conditions are expected to remain difficult, with housing activity continuing at low levels over the coming months."

In response to German chancellor Angela Merkel's comments this week that the ECB has bowed to international pressure with the purchase of covered bonds, Trichet said: "All that we do is done without bowing to influence or pressure."