A small increase in house prices in May, according to Nationwide?s figures, indicates a soft landing for the property market in months to come.
As the market cools, prices will continue to rise, but at a slower rate than at this time last year, predicts the mortgage lender.
Interest rates are a key factor in this trend, and since widely held expectations that rates would rise again this year have not been fulfilled, many now believe that the interest rate has now peaked, and the economic background is favourable and all of the major housing market drivers remain firm, it said today.
There are, of course, risks to this stability, mainly associated with the high levels of household debt which make consumers more vulnerable to rates of interest and economic circumstances, but for the time being it appears the soft landing is on its way.
?The relatively buoyant economic conditions mean that sellers are still under little pressure to reduce their prices, but buyers are not willing to stretch themselves to meet them.
?We anticipate that this will unwind, but gradually, as sellers adjust their expectations, rather than as a result of forced or panicked sales,? said Nationwide?s Group Economist Fionnuala Earley.
?Seasonally adjusted house price approvals in April increased and we expect that they will continue to do so for some months.?