29/07/2005

House prices 'resilient' in static market

Nationwide has reported "resiliency" in house prices despite economic uncertainty in a "softening" housing market.

The latest survey from the Nationwide showed that house prices had risen by 0.2% reversing a 0.2% price decline in June.

Commenting on the figures Fionnuala Earley, Nationwide's Group Economist, said: “House prices bounced back in July, increasing by 0.2% and reversing the fall in June. However, the overall picture remains one of a gently softening market.

"The annual rate of house price inflation fell to 2.6% in July - its lowest rate since May 1996. This compares with a rate of 4.1% last month and more than 20% this time last year."

"The price of a typical house in the UK is now £158,348," she said.

The survey revealed that housing market activity was showing some signs of a recovery.

“During the month several indicators have suggested that housing market activity is improving slightly, albeit remaining at levels significantly lower than last year," said Ms Earley. "The number of house purchase approvals has picked up steadily since the start of the year, reaching a seasonally adjusted 96,000 in May, up from 83,000 in January. Early indications suggest that there may be another small increase in official data for June, as estate agents report increased buyer activity and some softening on the part of sellers with respect to expectations on sales prices.

"This could be the start of some unwinding of the stalemate between buyers and sellers and see the return of some liquidity to the market."

Meanwhile, the National Association of Estate Agents (NAEA) recently reported that there were a record number of properties on agent’s books in the second quarter of this year, making it a "buyer’s market".

NAEA reported that on average estate agents had 78 properties on their books in Q2 this year, compared to 55 in Q2 last year, an increase of 29.4%. House prices have remained largely static.

NAEA President Chris Hall said: “The survey does confirm, however, that buyers should still be able to negotiate an average of 4.5% below the asking price”

The Halifax has warned that house prices could fall by up to 2% and investment bank Morgan Stanley indicated that a drop of 5% was possible.

(SP/KMcA)

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