House prices rise again in June

The cost of a home in Britain rose by 0.9 per cent in June to £156,442, figures from the Nationwide building society showed. The increase was better than had been expected, with anlysts estimating a drop of 0.5 per cent, and comes on top of a 1.3 per cent gain in May. The improvement will fuel hopes the market is returning to boom levels and means that prices are now just 9.3 per cent lower than they were a year ago. It is the third increase in the last four months and was greeted by the Nationwide as a "welcome surprise".Martin Gahbauer, Nationwide's chief economist confirmed the better trend, saying that if "the pattern of the price movements seen in the first half of the year is repeated over the second half, then prices should only show a small single digit fall for 2009 as a whole."However the rises belie recent weak bank lending data and negative commments from top economic bodies like the Organisation for Economic Cooperation and Development. Yesterday the Bank of England revealed just 43,414 mortages were approved in May, a mere tenth of the level a year ago and the weakest number for over 16 years. The argument put forward by the Nationwide for the price rises in a weak environment was that there is little property being put up for sale currently – a situation which is unlikely to last forever.WHAT THEY ARE SAYINGHoward Archer, an economist at Global Insight, in the Daily Telegraph: "We are still far from convinced that house prices have bottomed out and we certainly do not think that we are at the start of a renewed sharp upward trend."David Smith, senior partner, at property consultancy Carter Jonas, in the Times: "Demand is by no means strong but it is getting stronger, influenced in part by the feeling that interest rates may soon be rising." ·