House price falls soften

The price of an average UK property has fallen less at the start of 2009 says a new report from Nationwide

The average price of a UK property fell by 1.3% in January to £150,501, down 16.6% year-on-year, a more gentle fall than December’s figure of -2.5%, says the latest housing report from Nationwide. The three-month average also improved from 4.2% in December to -4% in January.

Higher buyer enquiries are a positive sign, says the report, although these numbers are not translating into mortgage approvals, although this is most likely because would-be buyers are curious about what is on the market but in no hurry in the current environment.

Although there are positive signs for January, this is no confirmation that the market is poised for recovery: ‘A pre-condition for recovery in the housing market is an end to the deterioration in the wider economy,’ said Martin Gahbauer, Nationwide’s senior economist.

However note must also be taken of the fact that a considerable amount of stimulus has been provided over the last few months and while rate cuts have not yet had an immediate impact, historical evidence suggests that interest rate cuts typically take 18-24 months to feed through into the wider economy.

This and other stimuli don’t change the economy immediately, the report adds, but they do provide the path for a future recovery out of recession. Although this is still some way off, it says, it would undoubtedly improve the outlook for the housing market.’