The Nationwide Building Society's latest report says that house price growth in the UK is at its lowest level in nine years. During the month of May, house prices in the UK rose by 0.3 percent, which is 0.6 percent less than that of the previous month.
For the year ending in May, property prices rose by 5.5 percent, again the lowest since 1996. These figures prompted the lender to say, "The market remains on track for a soft landing." Fionnuala Earley, an economist at Nationwide, said, "This continues the trend witnessed since the start of the year and is consistent with Nationwide's view that the market is cooling gradually." In May, the average price of a home in the UK was £157,272.
"The consensus is now that interest rates have peaked. But this does not suggest that the market will pick up again rapidly, rather that it will continue gently to cool," Ms Earley said.
Nationwide added that the poor health of the retail market was holding the consumer back. "There are some gloomy views about the market. Our view is that the market is underpinned by the relatively strong economic background," Earley said adding that it was now unlikely that house prices would show a steep fall. "The decision to leave interest rates on hold is clearly good news for the housing market, where deteriorating affordability has held first-time buyers back," she said.
Ed Stansfield, of Capital Economics, commented, "With signs that the abrupt slowdown in consumer spending has begun to spill over into the labour market now evident, tax increases in the pipeline and mortgage demand remaining subdued, it seems probable we are still in the early stages of a protracted housing market correction."
Howard Archer, at Global Insight, added "There seems little likelihood of a sharp correction in house prices in the coming months, unless the economy slows markedly and unemployment starts to rise significantly."
The Bank of England figures released on Wednesday say that the housing market is in good shape as mortgage approvals had risen to 95,000. This is the highest that they have been in the last nine months.
Posted
on : Mon, 06 Jun 2005 07:30 GMT | Mortgages News
By : Rob Davis
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