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House prices rise month on month but are still down on the year

House Prices

As the world sleep-walks blearily through August and most people are happily ensconced on their summer break (mine was very nice thanks), there are some real news items trying to make headway in the traditional silly season. For example, this week it was revealed that house prices rose in many areas of the UK in June compared with the previous month, but year-on-year values have fallen, according to official government figures. On average, house prices increased by 0.6% in June compared with the previous month, the Department for Communities and Local Government (DCLG) said. The average UK home was valued at £204,981, although house prices were down 2% from a year ago. But London again bucked the trend, with a year-on-year rise of 1.5%. The annual change was sharpest in Northern Ireland, where prices fell by 8.1%, followed by Wales, down 5.6%, and Scotland, down 2.3%. In England, year-on-year house prices fell by 1.8%, with regional changes ranging from a 5.1% fall in the North West of England to the rise in the capital. However, seven of the nine English regions showed month-on-month increases. This was greatest in London with a 1.6% rise in June compared with May. Only Yorkshire and the Humber (down 0.5%) and the North West (down 1.4%) recorded falls. The snapshot lags behind other house price surveys, although figures from the Halifax also showed month-on-month price rises recently. The DCLG figures were published the day after property website Rightmove said that house sellers had been dropping their asking prices. It said asking house prices fell by 2.1% this month after a 1.6% fall in July, but the gap between asking prices and selling prices remained wide. In related news, those in the north of the UK are more likely to face mortgage arrears than those in the south, according to an analysis by credit ratings agency Standard and Poor’s. The agency looked at a sample of 1.5 million home loans across the UK and came to the conclusion that the widening north-south gap in arrears is partly due to the significantly more robust employment trends evident in the south of the UK since the start of the recent downturn in 2007, compared with the trends in the north. The Standard and Poor’s study also found that more mortgage borrowers in the north continue to be in negative equity. It is believed that the sluggish housing market in northern regions over recent quarters may be partly responsible for this rise in house prices.

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