UK: House prices fall again, says Nationwide
House prices have fallen annually for eight months in a row and the market will remain subdued until people start to see a continued pick-up in their finances, Nationwide said today.
The 0.9% year-on-year decrease took average prices to �164,153 in October, continuing a pattern of small annual increases or falls which started in late 2010, the report said.
Despite figures last week showing an end to the longest double-dip recession since 1950, Nationwide said the economic recovery is likely to remain “fairly sluggish” as households try to repair the state of their finances rather than spend.
Robert Gardner, Nationwide’s chief economist, said: “The situation is likely to remain challenging in the housing market.
“Although the UK has been adding jobs in recent quarters, even in the midst of recession, conditions remain very difficult for households.
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“Wage growth is still not keeping up with the cost of living and unemployment is still well above normal levels.
“This helps to explain why housing market activity has remained subdued, with the number of mortgage approvals still running at little more than half their long-run average.”
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An �80 billion Government scheme to kickstart lending was launched at the start of August, which has caused an increase in mortgage availability, although lenders have toughened their borrowing criteria, making it harder for people to take a deal out.
Inflation eased to its lowest level for nearly three years in September, but experts predict the pressure on households will increase in the coming months amid rising energy bills and food costs.
Mr Gardner said: “Housing market conditions are likely to remain fairly subdued until there is a sustained improvement in the wider economic environment.”
In a sign of what is to come, British Bankers’ Association (BBA) figures recently showed that mortgage approvals for home buyers reached a five-month high in September, but they still remained below the levels seen last year.
The BBA said households have “no appetite” to take on more debt and demand for loans remains weak amid the uncertain economy.
On a month-on-month basis, house prices rose by 0.6% in October, more than offsetting a 0.4% decline the previous month, Nationwide said.
The report said monthly prices have failed to show any strong trend over the past half year, with three months of price increases and three months of falls since May.
It said the market overall continues to be relatively stable, with year-on-year house price growth remaining within either plus or minus 1.5% on all but two occasions over the last two years.