Home prices still on rise says Nationwide
January 27, 2005
House prices rose 0.4 per cent in January, according to figures from the UK's leading building society, which said there were now signs to suggest buyer sentiment was becoming more positive.
Nationwide said the average price of a property was now £151,757, while the annual rate of house price inflation had eased slightly to 12.6 per cent from 12.7 per cent in December.
Alex Bannister, Nationwide's group economist, said: "Since last summer the focus of homeowner and would-be homeowner concern appears to have shifted from `how high interest rates will rise' to the future direction of house prices.
"Consequently, it isincreasingly a buyers' market with prospective buyers staying on the sideline until the outlook becomes more certain.
"However, with prices having been broadly stable for six months and the market nearing the end of the usual seasonal lull, there are indications that sentiment may be about to turn more positive."
Prices had risen by an average of just 0.25 per cent a month over the past six months, Mr Bannister said, contrasting with the previous six months when they rose by an average of 1.7 per cent a month.
Despite a fall in the number of house purchase mortgages approvals - due in part to the introduction of mortgage regulation - the Nationwide expects activity levels to rise again in the coming months.
"While increased confidence about the outlook will bring buyers back to the market, they will be more price conscious than in recent years," said Mr Bannister.
"Higher activity levels and improving sentiment should help underpin current property
valuations but they are unlikely to reignite rapid house price inflation.
"We continue to expect small price rises in some months and small falls in others, with prices rising by two per cent during 2005 as a whole."
Interest rates will be raised to five per cent in the spring or early summer and that will
represent the peak in the interest rate cycle, he predicted.