House prices expected to stagnate for rest of 2012Make Text Bigger
House prices are stagnating and are expected to stay the same for the rest of the year, according to one of the UK’s largest mortgage lenders.
May house prices increased 0.5% after a 2.3% drop in April to an average £160,941, says the Halifax.
Although prices are changing month to month, the underlying trend is stable.
Prices in the three months to May were just 0.1% lower compared with a year ago and was the smallest yearly fall in house prices since October 2010.
Martin Ellis, the Halifax’s housing economist, said: “House prices in the three months to May were 0.8% higher than in the previous quarter, marking the second successive increase in this underlying trend.
“While there has been a modest improvement in the trend for house prices recently, the current average UK price is very similar to the levels both a year ago and at the beginning of this year. We expect this situation to continue with prices likely to still be around today’s levels at the end of 2012 as the ongoing tough economic environment constrains housing demand.
“Recent monthly house sales figures have clearly been affected by the ending of the stamp duty holiday for first-time buyers in March. Overall, the trend for sales – like that for prices – appears to be one of broad stability.”
The Nationwide house price survey for May released last week reported typical house values climbed 0.3% in May, with prices 0.7% lower than a year ago. The average house price was set at
“Over the last eighteen months, house prices have been fairly stable, despite the challenging economic backdrop,” said Robert Gardner, Nationwide’s Chief Economist.
“Demand for homes remains subdued on the back of weak labour market conditions, but the lack of homes coming onto the market is providing support for prices. This is in part a reflection of the low rate of building in recent years which has failed to keep pace with household formation.”
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