26
Feb
UK house prices 'lose momentum', says Nationwide
UK house prices fell for the first time in 10 months in February
as icy weather put off house hunters, the Nationwide building
society has said.
Average property values dropped by 1% compared with January,
with the average home worth £161,320.
But the annual rate of increase accelerated to 9.2% because
prices dropped faster a year ago.
Mortgage lending also slowed at the start of the year owing to
the hangover from the stamp duty holiday.
A separate Land Registry survey of house prices in England and
Wales found that in the previous month, January, prices rose
strongly by 2.1%.
That was the eighth monthly rise in a row reported by the
Registry and pushed the average house price up to £165,088 -
5.2% higher than in January 2009.
Blip?
A better indication of house price trends is available by looking
at the three-month on three-month comparison available from the
Nationwide.
This showed a 1.6% increase in the three months to February, having
slowed from 2% in January and from the peak of 3.7% in
September.
Prices surprised many commentators by remaining relatively
buoyant throughout the second half of 2009.
The Nationwide said it was difficult to gauge whether February's
fall was a "temporary blip" or the start of a new downward
trend.
"There is evidence from a range of indicators that the market
may have lost momentum in early 2010 as the stamp duty holiday
ended and house hunters were obstructed by the icy weather," said
Martin Gahbauer, chief economist for the Nationwide.
"Even without the impact of stamp duty changes and the snowy
weather, it would have been surprising to see house prices maintain
the very strong upward momentum seen for most of 2009."
Little increase in household incomes and relatively high
unemployment could also have put the brakes on house prices.
Mr Gahbauer said that it was a "positive development" for house
prices not to race away from these economic fundamentals.
Mortgage lending
The number of new buyers making enquiries about homes dropped at
the start of the year.
Recent figures from the Council of Mortgage Lenders also showed
that gross lending for home loans fell by 32% in January compared
with December, to a 10-year low of £9.1bn.
This lack of buyer demand fed through to the drop in agreed
prices in February, Mr Gahbauer said.
There has been widespread agreement among commentators that the
slowdown in mortgage lending at the start of the year was the
result of bad weather and the end of stamp duty relief.
The stamp duty threshold dropped back to £125,000 on 1
January, prompting a rush on mortgage approvals and completed home
sales in the final months of 2009.
The government concession, which had temporarily pushed the
threshold up to £175,000 for just over a year, had been aimed
at halting the rapid slump in the property market.
As a result, first-time buyers would welcome any slow down or
fall in house prices, as they were among the most likely to suffer
when this relief ended.
Mr Gahbauer said that, with the Bank rate at a record low of
0.5%, mortgage borrowers were sticking to variable rate home loans
- rather than signing up to fixed-rate deals - as they expected
interest rates to stay low.
Regional variations
In January, house prices in England & Wales rose fastest in
London, where they went up by 3.9%.
Over the past year prices in London were up by 10.5% and they
were also positive in six other regions - Wales, the West and East
Midlands, the South East, South West and East Anglia.
However in the North West, Yorkshire and Humber, and the North
East prices fell in the twelve months to the end of January.
"The Nationwide Building Society numbers for February, also
published this morning, cast some doubt on whether this trend can
be sustained," said Simon Rubinsohn of the Royal Institution of
Chartered Surveyors (Rics).
"While bad weather may have played a role in knocking both
activity and prices this month, Rics believes that there shouldn't
be too much emphasis placed on monthly volatility in the numbers.
"
In a separate survey, estate agent Knight Frank said strong
demand for second homes could cause house prices to more than
double in sought-after areas.
It found that the number of second homes in England rose to
245,384 in 2009, some 2.6% more than during the previous
year.
source: www.bbc.co.uk/news Friday
26th February 2010