House prices rise by 0.5%

Nationwide’s says house prices rose by 0.5% in March, with the three-month index showing a 0.6% increase Bad news for first-time buyers: house prices rose by 0.5% in March, according to latest figures from the Nationwide building society. The rise leaves average house prices in the UK just 0.1% higher than a year ago at £164,751. The three-month-on-three-month index, the preferred measure of house price inflation for economists because it smoothes out blips in performance, shows an increase of 0.6% to the end of March. The first quarter figures have also been released, showing prices rising by at least 1% in eight out of 13 regions. Yorkshire and Humberside saw the strongest quarterly rise of 3.4%, while Northern Ireland’s house prices were weakest with a 2.2% fall. Prices in London rebounded in the first quarter with a 2.3% increase. But Robert Gardner, the Nationwide’s chief economist, remained gloomy about prospects for the housing market: “The outlook remains uncertain, but all things considered this is unlikely to mark the beginning of a strong upturn in prices. “The economy entered a soft patch at the back end of 2010, and there have been few signs of a strong bounce-back. The jobs market remains challenging and Nationwide’s consumer confidence index suggests sentiment has fallen to an all-time low in recent months.” But this does not necessarily point to big falls in prices that would suit those struggling to buy their first home. Gardner continued: “While demand is likely to remain fairly soft, a rapid increase in the supply of properties also appears unlikely. Low interest rates and a stabilisation in labour market conditions have prevented a rise in forced selling, and the subdued market outlook is deterring many sellers. “With the economic recovery expected to remain sluggish, the most likely outcome is that the property market will follow suit, with low transaction levels and prices moving sideways or modestly lower through 2011.” He pointed out that expected interest rate rises will exert a greater drag on household income now than it would have done before the recession, because the proportion of mortgages on variable interest rates has risen from 48% in 2008 to 62% now. He added that for a house with a repayment mortgage the typical monthly payment is around £455, equivalent to 23% of individual take-home pay. A 1% rise in interest rates would see this rise to £494 – 25% of current take-home pay. But if the Bank of England rate rises to the average of 4.5% it was at in the five years before the crisis, typical payments will rise to £621 if fully passed on to borrowers. This would represent 29% of take-home pay should wages keep rising at the current rate of 2.3% a year. House prices First-time buyers Property Housing market Jill Insley guardian.co.uk

Posted by on March 31, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.