House prices go up again, but fears grow that economy cannot sustain rise

The housing market rebound showed no sign of slowing in October, according to the latest figures, with prices rising by 1.2 per cent.

Halifax said that the increase was the fourth consecutive rise by its measure.

House prices are now 7.1 per cent higher than they were six months ago and 2.9 per cent higher than in December last year, the lender said.

Prices in the three months to October were 2.9 per cent, or £4,667 higher than in the previous three months.

Halifax said that there were early signs that more people were beginning to put their homes on the market as conditions improved; a trend that economists have said could lead to a relapse in recent price rises.

Howard Archer, chief economist at Global Insight, said: ‘Personally, I’m sceptical that house prices can go on rising for much longer. That’s not to say that they will fall off a cliff – I just don’t think the economy is strong enough to sustain these increases.

‘A relapse in house prices will be even more likely if the recent firming trend leads to more properties coming on to the market, thereby moving the supply-demand balance away from vendors towards buyers.’