Nationwide’s November survey shows a 0.4% monthly rise, but one housing expert says the data ‘is as misleading as it gets’
The housing market has remained “surprisingly resilient” in November, Nationwide said, as average house prices increased by 0.4% month-on-month.
The price of a typical home has risen to £165,798, 1.6% higher than a year ago, Nationwide said, following a 0.8% year-on-year increase in October.
The figures come shortly after the government revealed proposals to underwrite mortgages for first-time buyers as part of efforts to “unstick” the housing market.
But Robert Gardner, Nationwide’s chief economist, warned that the slow growth forecast for the next couple of years is likely to weigh on the market. “House prices have remained surprisingly resilient in recent months, despite the deterioration in the economic outlook.
“But with the UK economic recovery expected to remain sluggish well into 2012, house price growth is likely to remain soft with prices moving sideways or drifting modestly lower over the next 12 months.”
Fears have been growing of a “perfect storm” in housing, with construction at its lowest since the second world war, mortgage lending tightly restricted, and rent and purchase prices stubbornly high.
Nationwide said that despite the rise in prices in November demand conditions remained “extremely subdued”, with the number of housing transactions and mortgage approvals still well below levels seen before the financial crisis.
The lender said high unemployment, slow wage growth and weak consumer confidence would continue to weigh on the sector and house prices.
Howard Archer from IHS Global Insight said: “House prices can be volatile from month-to-month and from survey to survey. It is notable the Nationwide data follow Hometrack reporting that house prices fell 0.2% month-on-month in November, after a similar drop in October, and were down by 2.3% year-on-year. In addition, the Land Registry reported that house prices in England and Wales fell 0.9% month-on-month in October after a drop of 0.6% in September.
“We currently see house prices falling by about 5% from current levels by mid-2012 before stabilizing in the latter months of the year. Furthermore, we believe there are significant downside risks to this forecast.”
Nicholas Ayre, director of homebuying agency Home Fusion, agreed: “This latest set of Nationwide house price data is about as misleading as it gets.
“Low transaction levels and low supply have led this data to bear scant resemblance to reality. Demand is glaringly weak, and as we enter what could potentially be an apocalyptic year for the global economy, it is likely to weaken further.
“Rising unemployment, collapsing consumer confidence and consistently high inflation do not make for a robust property market. The ongoing low interest rate and the improved availability of mortgages are rare glimmers of hope amid a fog of economic negatives.”
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