London Home Prices Rise in June, First Increase in 11 Months

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According to the newly released Chesterton Humberts/CEBR JUNE 2011 House Price Poll of Polls, UK house prices may have bottomed out with the first significant price increase in 11 months.

Report Highlights:

• House prices rose by 0.3% over the month to June, the first significant increase in eleven months.

• We believe this marks the beginning of a turnaround for UK house prices overall, as the shortage of supply, increase in rents and weakness of the pound begin to drive up values.

• Within the UK, London still sets the pace.

House prices edged up by 0.3% over the month to June, a moderate increase admittedly, but nevertheless the steepest rise in eleven months. This was also the first significant monthly increase so far in 2011 and is indicative of the stabilization of house prices currently taking place across the country.

Robert Bartlett, Chesterton Humberts' CEO said, "Last months results were encouraging but this month the Poll of Poll results show a solid strengthening with house prices up across the country.  London's house prices increased by 0.6% between May and June, the steepest increase of any part of the UK, once again demonstrating the capital's attractiveness as a destination for foreign investment."

A more consistent measure of house prices, the three month moving average is now at its highest rate of change since November 2010. Whilst this quarterly change is still negative at -0.3%, it is up from -1.5% in January, having risen in each of the last five months.

All in all, it looks as if our prediction that 2011 would be a year of two halves for the housing market is coming through.

House price growth softened in the first half of 2011, dampened by consumer fears over public sector cutbacks and associated increases in unemployment. However, the shortage of available housing in addition to overseas demand and the cheap pound are forces pushing prices in the other direction. The market is now close to the bottom for the UK as a whole, and may even already be on the way up.

Barlett further commented, "London is also the only part of the UK where house prices are now higher year on year. House prices have risen by 3.5% over the year to June. Traditionally July and August are quiet months with little market activity.  At this point however, many of our London offices are working at peak levels with properties regularly turning over within a month.  The key to continuing recovery is whether the market sustains this level of activity through the rest of the summer."

Douglas McWilliams, Chief Executive of CEBR said, "The housing market has performed relatively well over the last month, given that the Royal Wedding bank holiday weekends almost definitely reduced the number of homes coming onto the market and kept sales pinned down. Nevertheless, buyer interest has held firm, which is down to a more optimistic view of the future as improvements in the wider economy, supported by low interest rates have instilled confidence. There is still however, a two-speed recovery in house prices, with houses at the bottom end of the market still seeing sizeable falls".

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