Tuesday, June 29 2004

The pace of house price growth in the UK has eased to a 0.9% rise in June from 1.7% in May, according to Nationwide’s latest figures. This brings their annual inflation rate to 19.1% overall, bringing the average house price to £151, 524.

The mortgage lender also found that prices have evened out somewhat round the country, with annual inflation picking up in London and the South East, areas which up until now have been sluggish compared to other less expensive regions.

It also found the market still strong in Wales and the North as well as Scotland, as the gap in affordability closes, citing buyer confidence and expectations of further price rises as major factors in this.

However, this year’s continuing rises coupled with Nationwide’s maintained confidence in its predictions for the twelve months to December – 15% growth – indicate it expects these decreases to continue.

Commenting on Mervyn King’s evidence to the Treasury Select Committee last week, to the effect that prices are now above their sustainable level, Alex Bannister Nationwide’s Group Economist, said: ‘Whilst we would concur with the majority of the Governor’s comments, we believe that the most likely conclusion to the current housing market cycle is a long-drawn out period of slower inflation and low housing market activity, as opposed to a slump in prices.

‘Buyers assuming that 5-10% annual house price growth will be the norm over the coming years are very likely to be disappointed. It is possible that certain areas of the country will see no growth in prices over the coming years.’

Nationwide