House price surveys cause confusion

Posted on July 30th, 2011 | Categories - House Prices

Two surveys published this week have given mixed messages about the direction of house prices.

The Nationwide Building Society’s survey showed that house prices were stabilising and actually rose in the UK during the month of June by 0.2%, with the average house worth £168,731, just 0.4% lower than a year ago.

A second survey by the Land Registry agreed that prices had moved sideways during the month of June but said they were still down by 2.5% year on year; a more significant fall than was registered by the Nationwide. The average house price was £161,479 according to the Land Registry survey.

Amongst all the house price surveys the figures from the Land Registry are generally thought to be the most accurate as they are based on actual sales.

Demand

The Nationwide said that demand for homes was still sluggish with mortgage approvals consistently running at about half of the rate seen before the credit crunch.

During the first four months of the year there were on average 42,733 housing transactions per month, down from 45,509 per month for the same time period last year.

Reaction

Robert Gardner, chief economist at the Nationwide believes that the levelling off in house prices seen over the past month is a reflection of the “uncertain” state of the UK economy.

He said: “House prices remain relatively high compared to incomes and, together with more demanding deposit requirements, this is dissuading, or at least delaying, some first-time buyers from entering the market.”

Some experts believe that the Land Registry figures are evidence of a reemergence of buy to let as a prominent part of the market. This view is backed up by data from Moneyfacts showing the number of buy-to-let mortgages available has hit 505, the highest level since September 2008.

Whilst property prices are stagnating, remaining stable or however you choose to describe the current situation, rents are rising and demand for rented property is still high as lending criteria remains tight.