Nationwide suggests house prices will remain flat

| October 2, 2012 | 0 Comments
Nationwide suggests house prices will remain flat

Nationwide building society has reported a 0.4 per cent fall in house prices in September, following a rise of 1.1 per cent in the previous month.

However, the building society suggests that the annual rate of house price change is a more accurate indication of the state of the housing market, as monthly figures have been affected by factors such as the end of the stamp duty holiday.

On an annual basis the housing market remains fairly stable, the building society says, with prices 1.4 per cent lower than September 2011.

The price of a typical home now stands at £163,964.

Nationwide expects house prices to remain stable or fall slightly over the next year, despite signs that the UK economy is making a gradual recovery.

The building society suggests that the Bank of England’s new Funding for Lending scheme could bolster the housing market.

The scheme offers £80bn of lower cost funding to banks and other lenders, on condition they lend the money to commercial and personal borrowers.

However, Bank of England figures show that scheme failed to boost mortgage lending in August.

A total of 47,665 mortgages were approved for house purchase in August, an increase of just 109 compared with July, and lower than the average of 49,013 for the previous six-months.

Nationwide also released figures showing a wide regional variation in house prices in the third quarter.

On average, prices fell by 0.5 per cent compared with the previous quarter and by 1.6 per cent compared with the third quarter of 2011.

House prices fell by 0.3 per cent in England in the 2012 third quarter, and by 4 per cent in Scotland, 4.7 per cent in Wales and 9.3 per cent in Northern Ireland.

Robert Gardner, Nationwide’s Chief Economist, said: “Looking forward, policy measures such as the Bank of England’s Funding for Lending Scheme should provide support for activity in the housing market by ensuring the
availability of credit and lowering its cost.

“However, labour market developments will remain of paramount importance in deciding the trajectory of house prices.

“There are grounds for caution on this front, as the unusual combination of rising employment and declining economic activity that was evident in the first half of 2012 is unlikely to be sustained.”

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