House prices have rebounded to levels last seen at the end of 2008 after increasing for the second successive month in August, according to figures out yesterday.

Halifax said average prices rose by 0.8 per cent — the fourth month since the start of 2009 in which the lender has recorded an increase. Recent stabilisation has resulted in prices remaining “largely unchanged” in 2009, bringing the total fall from August 2008 to 10.1 per cent, the lender said.

Martin Ellis, housing economist at Halifax, said: “Demand for housing has increased since the start of the year, due to better affordability and low interest rates. This, together with low levels of property availability for sale, has boosted house prices over the last few months.”

In what is increasingly coming to be regarded as a long-term upward trend rather than a blip, estate agents said that property prices were rising faster in some parts of the country than the Halifax figures suggest.

Peter Rollings, managing director of Marsh & Parsons, the estate agent, said: “The increase in house prices nationally comes as no surprise and in pockets of the country — most notably in London — prices are rising faster than these numbers indicate.

“The underlying problem is a lack of supply of properties on the market,” Mr Rollings added. “Some homeowners lack confidence and are reluctant to take on a bigger mortgage and the cost of moving, while others are restricted by difficulties in obtaining a larger mortgage.”

Evidence that the housing market is still suffering the consequences of a severe correction remains widespread.

Nicholas Leeming, director of PropertyFinder.com, said: “The recession is almost certainly over and the latest good news on the housing market shows the recovery there is real, not a false start. But it’s also quite clear the economy and the housing market are still in intensive care and will need strong support from low interest rates and additional money supply for some months to come.”

Some commentators expect that there may be a diminished performance, and even a return to slight house price falls next year, if the Bank of England increases interest rates.

David Smith, senior partner at Carter Jonas, the chartered surveyors, explained: “Higher interest rates, when they do come, will result in fewer buyers, which will reduce demand and once again apply downward pressure on prices. The combination of increased supply and reduced demand could catch a lot of people out in 2010.”

Meanwhile Redrow, the house-builder, announced its “worst ever” annual results yesterday, a loss of £140.8 million in the 12 months to June. Although this was an improvement on the £193.9 million loss suffered a year earlier, Steve Morgan, the chairman, said: “It is intensely disappointing to me to have to report the worst set of trading results in the company’s history. I am determined to ensure that this will not be repeated and, along with the rest of the management team, am clearly focused on steering the business back to delivering the sort of robust performance that it has delivered in the past.”

Like other housebuilders, the group intends to shift its focus away from apartments, which have fared badly in the past two years, towards more traditional family housing. It will introduce a new range of homes with an historical architectural theme in an effort to re-establish the brand. However, analysts warned that an equity raising at the company was still on the cards.

Revenue from sales more than halved from £650.1 million last year to £301.8 million this year, as the average price of a Redrow home fell from £156,900 to £137,400 and the number of properties sold declined from 3,925 to 2,113.

Mr Morgan, who founded the company 35 years ago, said that he intends to start buying sites again, adding that the company had made a mistake by purchasing “very little” land in 2005.

He hopes to have acquired 12 new plots by the end of the year but acknowledged that there were very few opportunities to buy in the present market.

Source: The Times

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