News: UK house prices suffer summer slide, says Nationwide

Fri, 29 Jun 12

UK house prices are experiencing a summer slide, according to the latest figures from Nationwide.

The lender’s House Price Index reveals that house prices dropped by 0.6 per cent in June from May to an average of £165,738. Values are now 1.5 per cent lower than one year ago - the lowest reading since August 2009.

Robert Gardner, Nationwide’s Chief Economist, comments: 'The slightly weaker trend we’ve observed since March is unsurprising, given the difficult economic backdrop, with the UK economy dipping back into recession at the start of the year and few signs of a near-term rebound. Part of the weakness in house prices may also relate to the ending of the stamp duty holiday in March, which provided a temporary boost in early 2012, as buyers brought forward purchases that would otherwise have taken place later in the year.

'The outlook for house prices remains highly uncertain. Economic conditions are expected to remain challenging over the next twelve months. However, policymakers’ efforts to bolster the supply of credit to the economy and to help lower the cost should provide support to demand. Moreover, the supply side of the market is still constrained, with construction failing to keep pace with the number of new households being formed.'

He adds: 'Overall, this suggests a continuation of the pattern experienced over the past two years, with prices remaining fairly stable over the next twelve months. However, history provides some comfort that the negative impact will be short-lived. Indeed, the decline in activity in recent months echoes the pattern seen at the end of the last stamp duty holiday in December 2009. This provides some comfort that much of the recent softness in housing market activity will subside in the months ahead.'

See also: Home Asking Price Index

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