House prices dropped again in January, continuing the downward trend the market has seen since
the middle of 2010. A spokesman for Nationwide commented that the property market “entered
2011 with a whimper rather than a bang”.

The comments accompanied the publication of the Nationwide’s monthly House Price Index survey.
The mortgage lender’s figures for January showed another house price drop – but one slightly less
than expected. Taking seasonal adjustment into account, house prices fell by 0.1 per cent, which
compared favourably to the 0.4 per cent drop economists had been expecting.

The Nationwide’s chief economist, Robert Gardner, said: “The outlook is still highly uncertain, but
the most likely outcome is that the pattern of low transaction levels and prices moving sideways or
modestly lower will continue through 2011.”

Tighter lending rules by Britain’s banks and building societies, combined with tougher economic
conditions resulting from inflation and rising taxes, mean that mortgage approvals are currently
around half their pre-crisis level. Nationwide said that a continuation of these conditions would
exert further downward pressure on house prices through 2011.

In his commentary to the survey, Robert Gardner added, ““Demand for homes looks to have
stabilised, albeit well below the levels prevailing before the crisis. Interest rates remain at historic
lows, and labour market conditions have stabilised – both factors that will provide support to the
market. However, the continued uncertain outlook for the economy will probably continue to keep
many buyers on the sidelines.”

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