by Mark Johnston
A new report just published shows quarterly house price results which has shown the first fall in five months. The report which is published by the largest building Society in the world, Nationwide shows a 0.5% reduction which is worrying news to an already fragile market.The annual property market growth also fell from 8.7% to 6.6% which many blame on a severe lack of buyers in the market. Some analysts see this as a result of mortgage lenders products only being offered to low risk borrowers with very large deposits. This is probably the financial industry taking safe steps to avoid another credit melt down.
Martin Gahbauer, Nationwide’s chief economist, said: “house prices feel in July for the first time since February. The price of as typical UK property fell by a seasonally adjusted 0.5% month on month, after having been unchanged in June.
Many were hoping to start and see the green shoots of recover but this news will be seen as a set back for the UK property market.
He went on to say: “So far in 2010, demand from homebuyers has made little progress in building upon the recovery seen during much of 2009. Despite the introduction of a second stamp duty holiday from the vast majority of first time buyers and record low interest rates, the number of properties changing hands across the UK is still running at only half the level seen prior to the financial crisis and recession.
The slow pace of buyers is most likely to be down to a combination of restricted funding especially in sub prime and the risky end of the market and the uncertainty about the future of economic outlook.
Following the announcement of the emergency budget, many households are staying putt in their existing homes to see how the cuts will effect them. Potential buyers lack confidence to buy their first home or to move to a larger property as they are concerned about their future income or even employment.
Martin Gahbauer went on to say: “Up until recently, the shortage of buyers in the market was more than offset by an even more severe shortage of properties for sale, with the result that prices rose. Evidence continues to build that this imbalance between supply and demand is easing. The abolition of HIPs has encouraged more sellers into the marker, while some of the excess supply in the rental market during 2009 now appears to be making its way back into the sales market as temporary landlords make another attempt to sell their properties”.
The current market seems to be stabilising and supply problems seem to be easing. Although the news of the 0.5% fall is a step back it will take several months to establish whether house prices are now moving around a flat price trend or whether the market is starting a period of free fall.
Story link - Nationwide report House Prices Down by 0.5%
Related stories to : Nationwide report House Prices Down by 0.5%