Nationwide House Price Index: Mixed picture for house prices

The latest house price figures from the Nationwide show a mixed picture.

According to the UK’s largest building society, house prices were unchanged in March, but rose by 0.8% over the past year, taking the average house value to £162,630.

The Nationwide are the first of the major house price indices to report on March’s activity, it will be interesting to see whether their figures are backed up by the Halifax and the Land Registry when their data is released.

Commenting on the figures, Robert Gardener, Chief Economist at the Nationwide, said: “House prices were unchanged between February and March after taking account of usual seasonal effects. However, in annual terms, house price growth moved into positive territory for the first time since February 2012.”

Patchy start to 2013

The release of the figures for March gives us the opportunity to assess the performance of the housing market over the first quarter.

The results are patchy. Overall house prices increased by 0.8% over the past three months, with seven of 13 regions seeing prices rises.

Unsurprisingly London saw the largest increases, with prices rising to record levels, above even those seen at the height of the housing boom in 2007; on the other hand, Scotland saw the largest falls.

Outlook for house prices in 2013

Looking forward, the direction of house prices is hard to predict. The continuing economic difficulties would normally be considered to have a negative effect on house prices, but with government help in the shape of the Funding for Lending Scheme, the New Buy scheme and the newly announced Help to Buy scheme, there is hope that activity will increase.

Gardener said: “In recent months buyer demand has been supported by healthy rates of employment growth, as well as the Funding for Lending Scheme, which has helped to reduce mortgage costs and increase credit availability. At the same time housing supply has remained relatively constrained.”

Turning to prospects for the rest of the year he said: “The outlook for the housing market is unusually uncertain at present, in part because the prospects for the wider economy are unclear, but also as the impact of a number of policy initiatives is hard to gauge.”