Can we rely on the latest house price increase? Thursday, 2nd July 2009

There has been reaction by property experts to yesterday's Nationwide Monthly House Price Index which saw a 0.9% in June.

Some say that it highlighted renewed buyer enthusiasm for the best properties with very thin house sales volumes. The best locations and most desirable properties are seeing price stabilisation at the moment, whereas less desirable areas and homes are still seeing big annual price falls. Could be though that this renewed confidence and the increased buyer interest that estate agents are reporting will not last beyond the summer.

Wtih mortgage rationing is set to continue, as the banks struggle to recover from the credit crunch, this is causing a clear disconnect between property viewings and buying figures. In addition, unemployment figures are getting worse daily and the wider recession continues apace. Massive national and personal debt problems will see much more house price pain when interest rates start their inevitable increases next year.

An alternative view however is that the three-month rate of change has turned positive for the first time since December 2007 and is a sure sign of better things to come. However, transactions are still historically low, as we wait for the fundamental drivers of mortgage availability and consumer confidence to make a more assertive return.

It could be that Nationwide's figures bring further evidence that the housing market is on an upward curve, with price rises expected to continue throughout the rest of the year.

As the shortage of homes grows more severe and the competition for existing properties increases, so property prices could be forced up.