Surprising house price rise should be treated with caution

Michael White, Chief Executive of online mortgage adviser Email Mortgages.com, commented:

“This 1.2% increase in UK house prices is surprising to say the least given the continued falls noted in other house price indices over the last few months.  Even with this increase we would still counsel caution that this is not the start of any sustained improvement in house prices and this particular index may well continue to rise and fall over the months ahead.  However, for the Nationwide Index at least, a ‘Spring Bounce’ does seem to have materialised over the past few months, but this upward trend may not continue during the rest of the year.

“There are a number of reasons why we should continue to be cautious about any continued increase in house prices. Recent figures issued by both the Council of Mortgage Lenders and the British Bankers’ Association showed particularly weak lending levels and lenders continue to show little appetite to lend, particularly at 90% LTV levels and above.  Until this can be rectified many would-be purchasers will remain locked out of the market.  Those looking for further evidence of green shoots will point to increased first-time buyer activity in the market, positive noises from estate agents and the recent Rightmove average asking price figures which also showed an increase, however the fact remains that it is very early days to be suggesting a full-blown UK housing market recovery.”