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News: Housing Market bottoming out?

Thu, 31 Jan 08

House prices fell for the third month in a row during January, reveals Nationwide...

The building society said prices fell by 0.1% during the month, taking the average cost of a home to £180,473. The annual rate of price growth dropped to 4.2%, which is the lowest rate since December 2005.

Most housing surveys in recent months have suggested the market is slowing. Prices have been hit by higher interest rates and tighter lending criteria. Nationwide said the 3-month on 3-month rate of price growth - seen as a more reliable indicator of the health of the market - fell to -0.3%, down from 0.9% the previous month.

The building society's data is the latest piece of evidence to confirm that the property market continues to weaken. Earlier this week the Bank of England said the number of mortgages approved for people buying a home in December fell to 73,000, its lowest level since July 1995.

Weakening trend

The latest figures from the Land Registry showed that house prices in England and Wales dropped by 0.4% last month, the first fall recorded since August 2005

"The weakening trend in house prices during the last three months is consistent with the loosening in housing market conditions that has become increasingly evident in the data," said Nationwide senior economist Martin Gahbauer.

"Key indicators such as mortgage approvals and the sales-to-stock ratio have now fallen close to or even below the troughs reached in late 2004, a period that was followed by a year of very subdued price growth.

"This undoubtedly signals a continued cooling in annual house price inflation during the months ahead," he added. But Nationwide said it believed there were some "tentative signs" that the drop in demand could be "bottoming out", as potential buyers anticipated further interest rate cuts during 2008.

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