House prices falling slowly

Landlord Expert
By Landlord Expert November 29, 2012 09:07

Its latest monthly survey says average prices have been unchanged this past month at just under £164,000, and are 1.2% lower than in November last year.

The annual rate of inflation has now fallen for nine months in a row, albeit at a very slow pace.

The Nationwide's economist, Robert Gardner, said the underlying position of the house market was in fact stable.

"UK house prices were unchanged over the month in November, after taking account of normal seasonal factors," he said.

"Moreover, annual price growth has remained in a narrow band between +1.5% and -1.5% on all but two occasions over the past two years."

He said a key factor in preventing house prices from falling much faster had been the fact that unemployment had also fallen back in the past year, to just over 2.5 million people, despite the fact that the economy had recently been in its second official recession in the past four years.

"The UK labour market has performed much better than expected since the onset of the financial crisis, and this in turn has provided significant support to the housing market," he said.

"The resilience of employment together with the ultra low level of interest rates has been instrumental in preventing a glut of unsold homes from building up on the market and exerting sustained downward pressure on house prices."

Property sales in the first 10 months of the year in the UK have been running 7% higher than in the same period last year, despite the continued severe rationing of mortgage funds by lenders.

The government hopes that the Funding for Lending Scheme, launched by the Bank of England at the start of August, will channel cheap money to lenders who will then make mortgage funds more easily available to borrowers.

So far though there has been little evidence of that happening.

The main beneficiaries seem to have been borrowers who have large deposits, who are now being offered even cheaper loans than before, but there has been little improvement in the supply of funds to people who can only put down a small deposit.

Landlord Expert
By Landlord Expert November 29, 2012 09:07

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