House prices continue to fall
Jane Padgham, Evening Standard
HOUSE prices are still falling despite a healthy pick-up in sales, Britain's biggest building society revealed today.
Nationwide said the average price of a home slipped 0.2% to £156,517 in September following a similar fall the previous month. That pushed the year-on-year rate of increase down to 1.8% - the weakest since May 1996.
The latest fall means that prices stagnated in the third quarter of the year, with no increase at all on the previous three months.
It also indicates the Bank of England's cut in interest rates last month has failed to breathe new life into property values. The Bank's monetary policy committee trimmed the base rate by a quarter-point to 4.5% on 4 August, reducing the monthly repayments on a £100,000 mortgage by about £15.
Estate agents have reported that buyers are returning to the market. But this is mainly the result of vendors dropping asking prices rather than the start of a new boom.
Figures today from the Bank showed mortgage lending rose sharply to £7.6bn in August from £6.7bn the previous month, while approvals totalled 107,000 - a 14-month high.
Nationwide believes the market remains on course for a soft landing, with prices treading water for the foreseeable future. It is sticking with its house price inflation forecast of between zero and 2% for the full-year.
The building society's group economist, Fionnuala Earley ( AtW: notice its a new economist they have now...), said: 'Experience so far shows no evidence of an imminent crash. Instead, the housing market has remained fairly robust and, as house-price growth has softened, buyers have shown renewed interest which should help to support the market going forward. We should expect a period of unexciting movementin house prices for some time to come.'
But she warned that confidence is key and fears about the economy on the back of soaring oil prices could tip the market into a more serious downturn. A lack of affordability, particularly in London and the south east, will continue to act as a brake on the market, she added.
Today's report chimes with findings from the Royal Institution of Chartered Surveyors which last week said new enquiries from would-be homebuyers rose for the third month in a row in August, but about a quarter of surveyors are still reporting falling prices.
Some City economists continue to warn of a long period of falling prices. George Buckley at Deutsche Bank thinks they will dive by between 10% and 15%, while Ed Stansfield at Capital Economics has pencilled-in a 20% collapse.
Jane Padgham, Evening Standard
HOUSE prices are still falling despite a healthy pick-up in sales, Britain's biggest building society revealed today.
Nationwide said the average price of a home slipped 0.2% to £156,517 in September following a similar fall the previous month. That pushed the year-on-year rate of increase down to 1.8% - the weakest since May 1996.
The latest fall means that prices stagnated in the third quarter of the year, with no increase at all on the previous three months.
It also indicates the Bank of England's cut in interest rates last month has failed to breathe new life into property values. The Bank's monetary policy committee trimmed the base rate by a quarter-point to 4.5% on 4 August, reducing the monthly repayments on a £100,000 mortgage by about £15.
Estate agents have reported that buyers are returning to the market. But this is mainly the result of vendors dropping asking prices rather than the start of a new boom.
Figures today from the Bank showed mortgage lending rose sharply to £7.6bn in August from £6.7bn the previous month, while approvals totalled 107,000 - a 14-month high.
Nationwide believes the market remains on course for a soft landing, with prices treading water for the foreseeable future. It is sticking with its house price inflation forecast of between zero and 2% for the full-year.
The building society's group economist, Fionnuala Earley ( AtW: notice its a new economist they have now...), said: 'Experience so far shows no evidence of an imminent crash. Instead, the housing market has remained fairly robust and, as house-price growth has softened, buyers have shown renewed interest which should help to support the market going forward. We should expect a period of unexciting movementin house prices for some time to come.'
But she warned that confidence is key and fears about the economy on the back of soaring oil prices could tip the market into a more serious downturn. A lack of affordability, particularly in London and the south east, will continue to act as a brake on the market, she added.
Today's report chimes with findings from the Royal Institution of Chartered Surveyors which last week said new enquiries from would-be homebuyers rose for the third month in a row in August, but about a quarter of surveyors are still reporting falling prices.
Some City economists continue to warn of a long period of falling prices. George Buckley at Deutsche Bank thinks they will dive by between 10% and 15%, while Ed Stansfield at Capital Economics has pencilled-in a 20% collapse.
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