According to the latest information from Nationwide, house prices fell by 15% year on year in April. The average house price was £151,861. Given the weakness of the economy and the expected further increase in unemployment no “swift turn round” is anticipated within the building society.
There are no green shoots evident within this data release. The rate of change is slowing, good news in the much vaunted “second derivatives of economic growth” but prices are falling and reverting to trend rate. All the signs are prices will overshoot the trend rate.
Commenting on the figures Fionnuala Earley, Nationwide's Chief Economist, said:
“The price of a typical house fell by 0.4% in April. This reverses some of the rise seen in March, but is in line with our expectations, given the current economic conditions. April’s decline leaves the average price of a typical house at £151,861, down 15% from 12 months ago.” The 3-month on 3-month rate of change, generally a smoother indicator of the short-term trend in prices, improved to -3.1% in April from -4.1% in March.
“The chancellor announced several measures aimed at boosting the housing market in his Budget. The scheme for government guarantees for new, high-quality residential mortgage backed securities are welcome and may help to boost the amount of mortgage credit available. However, since the availability of credit is only part of the reason why the housing market is in the doldrums it is unlikely to lead to a swift turnaround in its fortunes. Lenders have already indicated the availability of credit is less of an issue than it has been, but at the same time expect the demand for secured lending will fall further."
Nationwide house prices April 2009.
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Economic news and analysis : no politics, no dogma, no polemics, just facts.