House prices still rising, says Nationwide
House prices are still rising, according to the latest monthly survey from the Nationwide building society.
Prices went up by another 0.5% in May, pushing the price of the average UK home up to £169,162 which was £15,000 more than a year ago.
Annual house price inflation fell slightly last month though, from 10.5% to 9.8%.
But the Nationwide said prices might keep on rising modestly as few properties were being put up for sale.
"Housing market conditions remain characterised by thin transaction volumes and a relative scarcity of properties for sale, despite a slow return of more sellers in recent months," said the Nationwide's chief economist Martin Gahbauer.
"The current supply-demand balance on the market is still consistent with relatively stable to modestly upward trending prices."
Prices have now gone up in 12 of the last 13 months, acccording to the Nationwide, a consistent level of price increase which has taken many observers by surprise.
With the level of sales still very low by historical standards, prices appear to being pushed up by a relative shortage of properties for sale.
"Since reaching a trough in February 2009 - following a drop of 19.3% from their October 2007 peak - house prices have risen by 12.2% and are now just 9.5% below the October 2007 peak," Mr Gahbauer said.
The Nationwide's report is very much in line with other house price surveys.
Its rival the Halifax has recently put annual house price inflation at nearly 7%, the Communities & Local Government Department calculated it at 9.7%, while the Land Registry has put it at 8.5% for England and Wales.
The new coalition government has said it is planning to raise the level of capital gains tax (CGT) from 18% to 40%, or even 50%, for top-rate tax payers.
The Nationwide said that if there was a delay between confirming the details in this month's Budget and actually implementing the plan, it could lead to more houses coming onto the market, thus depressing prices.
"If there is a significant time lag between the announcement of the increase and its actual implementation, then some second home owners and buy-to-let landlords may decide to sell in advance of the higher rate being introduced," Mr Gahbauer said.
"Such a development could lead the supply-demand balance to shift more in favour of buyers and relieve the current upward pressure on house prices," he added.
The recent abolition of the requirement for house sellers to provide a home information pack (Hip) to prospective buyers may also affect the market.
"The removal of Hips has definitely seen more sellers come to market and so the stock shortage will ease in the coming months," said David Smith of property consultancy Carter Jonas.
"There's no doubt that many buyers are holding out to see how this month's Budget will affect them before they commit to transact," he added.
However, the Council of Mortgage Lenders (CML) rejected the idea that removing Hips would make much difference to activity in the market, and said it would merely bring a "modest reduction" in the cost of selling a home.
The CML repeated its warning that the biggest issue facing buyers and sellers was the continued shortage of mortgage funds.
It warned of "prolonged mortgage rationing and higher borrowing costs" because banks and building societies have to find a way to repay the government the £300bn of emergency funds that it has provided to them since the onset of the credit crunch in 2007.