House prices rose in August thanks to low interest rates, according to a new report from Nationwide.
The Nationwide House Price Index for August 2009 has reported a house price rise of 1.6 per cent in August. The average house price in August was £160,224, compared to £158,871 the previous month.
Year-on-year decline has also slowed from -6.2 per cent to -2.7 per cent.
Low interest rates are helping to underpin prices at the present time, according to the report. The Bank of England has held interest rates at 0.5 per cent since March.
Nationwide's chief economist, Martin Gahbauer, commented: "The price of a typical house rose for the fourth consecutive month in August, increasing by 1.6 per cent on a seasonally adjusted basis. The three-month on three-month rate of change – generally a smoother indicator of the near term trend – rose from 2.7 per cent in July to 3.3 per cent in August, the highest level since February 2007."
He added: "The exceptionally low level of interest rates offers some explanation for why house prices have not repeated the very sharp falls of 2008."
But he warned: "At the moment, a rise in interest rates is probably still some way off. However, the eventual exit from exceptionally loose monetary policy could make the recovery in the housing market bumpier than some might expect after the last few months of price increases."