Nationwide downbeat on 2010 house prices
Despite reporting the sixth consecutive monthly rise in UK house prices in October, Nationwide Building Society has given a downbeat forecast for the market.
In delivering half-year results, the lender’s chief executive, Graham Beale, warned: “The growth in house prices over recent months appears to be driven by lack of supply, and growth in unemployment throughout 2010 will inevitably exert downward pressure on house prices.”
Mr Beale believes the remainder of 2009 and the whole of 2010 will “present a very difficult trading environment” and with economic recovery likely to be slow, the mutual suggests that interest rates will remain at their current level until “at least” the fourth quarter of 2010.
In contrast, the Royal Institution of Chartered Surveyors (RICS) recently concluded that prices will continue to rise in the near term.
In its October survey of members, the balance of surveyors reporting rises rather than falls in house prices stood at a positive 34%, up from 20% a month earlier and with the ratio at its strongest since December 2006.
RICS spokesman, Jeremy Leaf, commented: “Although the supply of property is beginning to pick up, it is still insufficient to keep pace with the increase in demand, which points to further price gains in the near term.”
He added “Cheap money remains a critical prop for the market and this is being reflected in the continuing appetite for finance from first-time buyers despite the large deposits still being demanded by lenders.”
Returning to Nationwide, the building society reported a 63% slide in underlying pre-tax profit, to £117 million, in the six months to the end of September, compared with £322 million a year earlier.