Confident buyers returning

Acute shortage of homes for sale is bolstering the market

The market experienced a dramatic improvement in fortunes during 2009. The most impressive bounce back has been seen on the Nationwide index, which now has prices up by 2.7 per cent annually.

The market seems to have been at its most buoyant during last summer and early autumn, with asking prices and leaping at that point. The big question now is can this momentum continue. Prices were up for the seventh month in a row in November 2009, according to Nationwide.

The Bank of England's quantitative easing programme, pumping in the region of £200bn of printed money into the economy, may also have created demand. If prices manage to sustain their run in popular areas, we could soon be back at unaffordable levels.

Green shoots, reasons to be cheerful during 2010

Confident buyers are returning to the market and have pushed property prices up by 2.7 per cent annually, says Nationwide.

An acute shortage of homes for sale is bolstering the market, says the Royal Institution of Chartered Surveyors. Its surveyors say prices will continue rising this year.

Nationwide has recorded seven consecutive monthly increases to November.

Libor, the rate at which banks lend to each other, has fallen to within a normal range of the base rate
- it stood at 0.6075 per cent on 7 December 2009.

Quantitative easing has pumped an extra £200bn into the economy, which should increase lending, keep Libor low and add inflationary pressure, which may eventually drive up house prices.

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