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House prices have trodden water during the past year, with property in the UK just 0.3% lower in value this month compared to September 2010, according to the Nationwide building society.
Its latest figures show that prices rose 0.1% during September, while the three-month-on-three-month figures, which are generally considered a better indication of trends, have remained static. The average house price in September was £166,256, compared to £165,914 in August.
Robert Gardner, Nationwide’s chief economist, said: “Sluggish demand for homes on the back of weak labour market conditions – combined with only a gradual rise in the supply of available properties – has helped to keep property prices fairly stable since the summer of 2010.
“We expect this trend to be maintained over the remainder of 2011, although downside risks have increased as UK and global growth prospects have weakened.”
Recent financial market turbulence had knocked the confidence of potential buyers, and continued deterioration of the eurozone situation could affect the cost and availability of credit, he said.
But he added that the recent fall in commodity prices such as oil should help household budgets, and that a recent decline in mortgage interest rates, including for borrowers with small deposits, would continue to provide support for housing demand.
“Providing the UK recovery gradually gathers momentum in the months ahead, we continue to expect house prices to move sideways or to drift modestly lower over the remainder of 2011 and into 2012,” Gardner said.
“Nevertheless, with demand and supply in the housing market finely balanced, recent financial market gyrations and the more challenging global economic backdrop have increased the downside risks in the period ahead.”
Howard Archer from IHS Global Insight said: “The current financial market turmoil and heightened concerns over the domestic and global economies are unlikely to do much for consumer confidence and willingness to commit to buying a house, in the near term at least.
“These factors are expected to outweigh the support to the housing market coming from extended very low interest rates, so we forecast house prices to fall by about 5% from current levels by mid-2012.”
Meanwhile, data released by the Land Registry show a 0.3% decline in August.
The figure, which covers transactions in England and Wales, indicates a reversal on the 1.3% increase between June and July. However, it is not such a severe drop as that measured by the Nationwide, which reported a 0.6% fall in August.
According to the Land Registry, Wales was the hardest hit with a 1.7% drop during August and 5.5% over the year, with the average house now valued at £117,534. The West Midlands, Yorkshire and the Humber, the north-east, the south-east, the north-west and the south-west also experienced falls in the month.
However, prices in the east, the east Midlands and London all rose between July and August. The east saw the biggest monthly increase, with average prices at £175,079 in August following a rise of 0.8%.
The only region in England and Wales to see a rise over the past 12 months was London, where homes have gone up by 2.1%.
The Land Registry figures also show that over the year to June, the number of completed house sales in England and Wales went down by 13% to 54,776. Fewer luxury homes are being snapped up, with the number of properties sold for more than £1m down by 28% to 465 during the year to June 2011.
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