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House price slump at an end, says estate agent; Average cost of a home rises by 1.6% during August, says Nationwide.

Byline: Sarah Miloudi

WALES' largest independent estate agency has claimed that the worst of the housing slump is over - as property prices hit their highest point in years.

The average cost of a home soared by 1.6% during August, the biggest increase since December 2006, the Nationwide said yesterday.

The news came as financial information group Moneyfacts revealed that the mark-up on fixed rate mortgages had reached a new high, as more and more lenders failed to pass on reductions in their own funding costs.

The annual rate at which property prices are falling continued to ease during August, the Nationwide claimed, narrowing to just 2.7%, down from around 6% in July.

The building society said that prices were now 3.2% higher than the beginning of 2009, and stood at an average of pounds 160,224.

The numbers caused housing experts to claim that the end of the extreme property crash had now been reached, although most cautioned that typical house values were still 14.4% below their peak in October 2007.

The Nationwide's chief economist Martin Gahbauer said: "The exceptionally low level of interest rates offers some explanation for why house prices have not repeated the very sharp falls of 2008."

He said that low interest rates had trickled through to borrowers and translated into more affordable home loan repayments for existing property owners, making it easier for people who lost their job to continue to meet their mortgage costs.

As a result, fewer forced sales have appeared on the market, as is normally seen during a recession. In turn the balance of supply and demand has shifted towards sellers during 2009.

Nigel Jones of John Francis, the largest independent estate agency in Wales, said that the rise in house prices during August was another "encouraging" sign for the sector.

He said: "While in general we have not yet seen prices rise in West Wales with values remaining level, more houses are selling for closer to their asking price, which is the usual precursor to seeing prices rise."

The director of the Carmarthenshire firm said that it was important not be overly enthusiastic about yesterday's set of figures, as the shortage of desirable homes was driving prices upwards.

However, he added that the steep price falls of 2008 were likely to be a thing of the past.

"These figures show the worst of the property slump is over, and there is room for cautious optimism in the market," Mr Jones said.

The latest report on the housing market came just days after the British Bankers' Association revealed that the number of mortgages approved had risen to a 17-month high during July, and followed data from the Council of Mortgage Lenders that showed a 26% leap in lending during the same period - the highest increase for nine months.

But a report by Moneyfacts published yesterday revealed that a flurry of lenders had hiked the cost of their fixed-rate mortgages over the last two months, a response to the increase in swap rates, upon which the deals are based.

Since June, two-year swap rates have slipped by around 0.3% but only a handful of banks and building societies have passed the reductions on. While Cheltenham and Gloucester and Nationwide cut their rates, a number of groups lifted them, and as a result, the average two-year fixed rate mortgage currently stands at 5.18%, despite two-year swaps sitting at 2.04%.

Moneyfacts' spokeswoman Michelle Slade said: "Borrowers looking for a new mortgage deal are continuing to pay a heavy price for mistakes made by lenders."

Meanwhile, property website Rightmove reported that householders' confidence in the sales market had reached a record high.

More than 75% told the site they did not expect any additional falls in values for the remainder of 2009. The findings sit in sharp contrast with a similar report issued in January. At the time, two-thirds of respondents expected further price slumps.

Rents rise in Wales for the second month in a row

Rental values in Wales have risen for the second consecutive month, as the supply of properties for let continued to shrink.

According to the latest index, rents increased by 0.5% during August and rose from pounds 636 in July to pounds 639 today.

However, which released the figures, said the annual increase in letting prices had started to reduce.

Meanwhile, Wales' supply of rental homes continued to decline and dipped for the sixth month in a row, the website claimed.

It said that this month's stock levels are more than 16% lower than their peak in February, and that homes are remaining on the market for shorter periods of time - 66 days compared to 72 days during July.

But the Cardiff rental market remained buoyant, and yearly rent prices declined by just 0.5%.
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Publication:Western Mail (Cardiff, Wales)
Geographic Code:4EUUK
Date:Aug 28, 2009
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