Nationwide’s latest survey shows a 1.1% decrease in house prices over the past 12 months as the market slows to a halt
House prices remained unchanged in June, with sluggish economic growth too weak to reinvigorate the market, according to the Nationwide building society.
Prices were down -1.1% during the year to the end of June to stand at £168,205.
Robert Gardner, Nationwide’s chief economist, said: “Stability remained the theme in June with house prices flat over the month. This left them 1.1% below the level prevailing in June 2010.
“At 0.3%, the three-month-on-three-month measure of house prices was slightly weaker than the 0.6% pace of increase recorded in May.”
He said there had been a “few encouraging developments” for households, with employment edging up and consumer confidence surging in May, but added that demand for property was still low because people were still struggling financially.
“Ultimately, these positives have not been enough to make up for the ongoing squeeze on households. With debt levels still high, the need to repair household finances is undiminished,” he said.
“However, sluggish economic growth and wages rising at less than half the rate of inflation means consumers are struggling to make progress in repairing their finances.”
House prices were supported by low levels of house building, while continued low interest rates were helping mortgage affordability and keeping the number of distressed sales down, the Nationwide said.
“It’s hard to make the case for prices rising or falling sharply over the remainder of 2011 if the economy develops as we expect,” Gardner said. “Economic growth looks set to gather pace in the months ahead, but is likely to remain unspectacular. This in turn points to only modest gains in employment and sluggish wage increases, which will continue to keep many potential buyers on the sidelines.”
But Howard Archer from IHS Global Insight said prices will continue to trend down over the coming months. “We suspect that modest overall falls in house prices are more likely than not over the second half of 2011 and the first half of 2012.
“On balance, we believe that house prices are likely to fall by around 8% overall from current levels on the Nationwide measure by mid-2012.”
He added: “Not only do economic fundamentals remain difficult overall for the housing market, but the May survey from Rics indicated that more houses are coming on to the market, thereby diluting the possibility that a shortage of properties could provide significant support to house prices.”
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