UK housing market recovery stalls

Published 30th Jun 2010

British house prices edged up just 0.1pc in June, raising fears that the property market recovery is stalling.


The increase compares with a rise of 0.5pc in May and 1pc in March and April, the Nationwide said it its lastest survey of house prices.

The annual rate of house price inflation eased to 8.7pc this month from 9.8 percent in May, with the average cost of a property now a £170,111.


Most economists believe the housing market will cool in the second half of this year as Britain's economy struggles to recover after an 18-month recession as the government tackles a record budget deficit of around 11pc of national output.

The slowing of the property market, combined with signs of consumer retrenchment across the globe, have raised fears of a "double-dip" in the economy. The FTSE yesterday dropped below the crucial 5,000 mark, hitting its lowest level in 10 months, on concerns the recovery may be faltering.

However Martin Gahbauer, Nationwide's chief economist, said part of the housing slowdown could be due to an increase in the number of homes on the market, "perhaps in response to the abolition of HIPs in the opening days of the new coalition government".

"With the level of demand remaining broadly stable, this would in part help to explain the recent slowdown observed in the rate of house price inflation," he said.

Nationwide, Britain's biggest building society, said that unless there was a significant pick-up in house price growth during the coming few months, the annual rate of house price inflation was likely to continue to drift lower, due to comparisons with the very strong price increases recorded during the summer of 2009.

Property values have now risen by 3pc since the beginning of the year.

Bank of England figures on Tuesday showed mortgage approvals unexpectedly stagnated in May at levels well below the peaks of last year and far beneath the heights hit during the housing market boom of the last decade.

Surveys have shown that increases in the number of homes being put up for sale are failing to be matched by rising demand from potential buyers, easing the mismatch between supply and demand and reducing the upward pressure on prices.

The South West saw the strongest house price growth during the second quarter of the year, with prices rising by 3pc, followed by the North West at 2.6pc and London at 2.5pc.

But the average cost of a home is continuing to fall in Northern Ireland, with prices dropping by 5.7pc during the three months, while growth was slowest in the East Midlands at 1.2pc.

Source: ' Telegraph '

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