by Mark Johnston
According to a new report published by the Halifax, house prices increased for the second month in a row. The report showed a 0.2% increase from July to August in the average price of a residential property in the United Kingdom.The report comes at the same time as Nationwide published its monthly figures which they showed a drop in house prices. Nationwide reported just under a 10% fall compared in the same period. Market insiders are concerned that this is illustrative of Nationwide performance and not a true picture of the UK market as the Halifax is showing that prices are up 4.6% over the past 12 months but others have rebuked Halifax’s figures as they tend to be weighted heavily in the north of England. Market analysts believe that the mixed messages show that the market is starting a period of stagnation.
Martin Ellis, Halifax’s housing economist said: “This, together with July’s rise, has reversed much of the modest decline in the three preceding months. Prices are now at a very similar level to that at the end of last year. Activity has also been largely static since the start of the year. These developments suggest that the market is broadly stable with house price inflation having cooled since last year when supply shortages helped to push up prices.”
The Halifax’s report suggested that house prices would probably remain static for the rest of 2010 with the potential of some minor falls but as a whole they were expecting a stable market. Mr Ellis pointed out that the average house price was £167,953 compared to £169,484 at the start of this year.
Nationwide’s chief economist Martin Gahbauer said: “the current correction is not an unhealthy development’. But he added: ‘The current period of price declines is likely to remain relatively modest.”
Mortgagerates.org.uk have been reporting on a number of negative reports coming from the UK mortgage and housing market. More analysts are starting to predict further house price falls.
The Chief UK economist at IHS Global Insight suggested that house prices may fall by up to 10% than their current value by the end of next year which is a worrying sign for both homeowners and lenders a like.
Andrew Goodwin a senior advisor at the Ernst & Young ITEM Club agreed with this outlook by suggesting between a 3-5 percent fall over the next 12 months before the UK sees any sort of stability in the market.
Market insiders are agreeing on one things and that’s the effect will be felt differently across the country with some areas seeing higher falls than others. Recent reports have suggested that Government spending cuts will be hardest hit in the north with London and the south east fairing better.
Richard Hatch at the property consultancy, Carter Jonas said: “The market is simply readjusting after getting ahead of itself. The market is stabilising, not collapsing. Last year, there was a major disconnect between the property market and the economy. House prices rose at a rate that was simply unsustainable and a degree of correction was always on the cards.”
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