House prices edging ahead
THE UK property market picked up in November, according to Nationwide. House prices rose 1% from October, Britain's largest building society said.
However, the average price stood at £153,439, around £900 below the peak in prices in July. And annual inflation slipped to 15% from 15.3% a month before.
The recovery in values follows a fall of 0.4% in October. The summer months saw a broadly flat market with rises of just 0.2% in September and 0.1% in August.
The price of the average house has risen 13.2% this year and Nationwide said it now forecasts that prices will end the year up 13% to 14%. The figure is a downgrade from a forecast of 15% made in March.
Nationwide said it expected prices to grow by just 2% in 2005 as rate rises and more realistic expectations about the market continue to bite.
The trend in house price growth continues to slow with activity levels falling to their lowest level for almost five years, Nationwide said. It added that so far the slowdown has been 'orderly'.
The price of an average house has risen by an average of just 0.3% over the last three months, compared with an average of 1% per month over the previous three months, it noted.
'With the exception of Northern Ireland, no region has escaped the slowdown in price growth over recent months,' said Alex Bannister, Nationwide's group economist.
Price growth has slowed more rapidly in regions where prices had been rising fastest and where affordability was looking more stretched, such as the North, the North West and Wales, he said.
Nationwide said the house price slowdown reflects 'higher interest rates, subdued real take-home pay growth, ongoing concerns about affordability and buyers' expectations of future price growth becoming more realistic'.
The report will give further strength to the argument that the Bank of England is unlikely to raise rates any further. Interest rates have been raised five times since last November, taking the base rate to 4.75%.
Data released by the Bank of England yesterday showed the number of mortgage approvals dropped to just 83,000, the lowest level since January 2000.
Nationwide described this figure as 'more in keeping with the housing market of the late nineties and early 2000 than the frenetic market of the last few years'.
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