|UK house prices increased by 0.5% this month but have effectively not moved in the last 12 months, according to the latest index published today (Thursday 31 January) by the Nationwide Building Society.The typical UK home is now worth £162,245, the same as it was in January 2011 but the Nationwide says that there are tentative signs of a pick up in activity in recent months.There is also considerable variation in price falls and rises across the country with the North/South divide widening. The data shows that 11 out of 13 regions saw prices fall in 2012. London experienced the most growth while Northern Ireland saw the steepest falls in home prices.
Robert Gardner, Nationwide’s chief economist, said that the government’s Funding for Lending Scheme has achieved some success in bringing down mortgage rates, with some signs of a pick up in lending activity.
‘Hopefully, the momentum will continue to build in the months ahead, though much will depend on whether the wider economic environment improves,’ he explained, adding that progress is likely to be relatively slow on that front if recent trends are any guide, with the UK economy shrinking for the fourth time in five quarters in at the end of 2012.
Gardner also said that the sharp decline in first time buyer numbers, from an average of 32,000 a month before the financial crisis to 20,000 currently, has remained a cause for concern.
He is hopeful that will improve this year. ‘While economic and financial conditions remain difficult, there are encouraging signs that in a number of key respects conditions for first time buyers are improving. We expect first time buyer numbers to gradually rise in the quarters ahead,’ he said.
First time buyers are the lifeblood of the housing market. As well as accounting for a significant proportion of housing transactions, currently around 40%, they also play an important role in the wider market, for example in helping to complete chains and enabling those that already own a property to move.
‘Affordability has already improved modestly, and policies such as the Funding for Lending Scheme should provide further support for the market, by keeping down the cost and boosting the availability of credit. However, the most decisive factor in achieving a sustained increase in first time buyer numbers is likely to be the performance of the wider economy, especially the labour market,’ he pointed out.
‘We, along with most forecasters, expect the UK economy to pick up the pace in the quarters ahead, though progress is likely to be gradual,’ he added.
Article first posted on Property Wire