Friday, 4 May 2012

House prices fall for third consecutive month

House prices have now fallen 11.8pc since they reached their peak in October 2007.

Nationwide expects house prices to stagnate in the next twelve months

The figures show that house prices dipped 0.2pc in April, leaving them down 0.9pc on last year, and the building society said that it expected housing market activity to "remain subdued" with prices showing little growth or a small dip over the next twelve months.
Robert Gardner, Nationwide's chief economist, said that recent softness in housing market figures has been affected by the expiry of the Government's stamp duty holiday for first-time buyers in late March. This provided an artificial boost to house prices in early 2012 as buyers brought forward purchases, meaning that the last few months have been softer by comparison.
The average price of a UK home is now £164,134, compared with £165,609 a year ago, and £167,802 in April 2010.
But according to non-seasonally adjusted data, the average house price on the Nationwide measure peaked at £186,044 in October 2007 and then fell back as low as £147,746 in February 2009. It then recovered to a peak of £170,111 in June 2010 and stood at £164,134 in April 2012.
"Consequently, house prices in April were 3.5pc below their June 2010 peak and 11.8pc below their October 2007 record high," said Howard Archer, chief UK economist at IHS Global Insight.
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He added that the Nationwide report "fully ties in with our long-held suspicion that house prices are likely to trend gradually lower over the coming months. Specifically we expect house prices to fall by around 3pc by the end of 2012."
"Housing market activity is very low compared to long-term norms. And the economic fundamentals currently look worrying overall for the housing market with unemployment high and likely to rise further, earnings growth muted, and the outlook uncertain. This is countering extended low interest rates."
Nicholas Ayres, from buying agents Home Fusion, said that house prices were being dragged down by the "full weight of consumer caution and economic uncertainty". It is also becoming more difficult for consumers to get a mortgage, with the Co-op being the latest lender to pull out of offering interest-only mortgages this week, and others tightening their criteria for handing out loans.
"The Nationwide are there or thereabouts when they say prices will stagnate over the course of the next year," he said. "My feeling is that this is the most positive scenario".

From the Telegraph