Nationwide: Sluggish 2012 ahead for house prices after December dip rounds off 'mixed' year for UK

Published 30th Dec 2011

House prices will tread water again in 2012 having dipped slightly this December, Britain's biggest building society says.

December's slip rounds off a year of greatly varying fortunes across the UK.

The average UK property price is 0.2 per cent lower than in November, standing at £163,822 on Nationwide's index.

But the mini fall-back didn't prevent prices standing 1.1 per cent up on this time a year ago.

Prices in nine of 13 regions in the UK have crept higher since December 2010, but with a marked difference between the biggest risers and hardest fallers.

Once again, London proved extremely resilient with prices in the capital rising 5.4 per cent.

At the opposite end of the spectrum, an 8.9 per cent drop in Northern Ireland made it the worst performing area for the fourth year in a row.

Nationwide chief economist Robert Gardner said, as a whole, the UK had shown 'surprising resilience' against a backdrop of slow growth and a crushed mortgage market.

However, he warned homeowners not to expect a return to the pre-2007 boom years.

He said: 'With the UK economy struggling to gain momentum, labour market conditions are likely to remain challenging in 2012, deterring buyers from entering the housing market.

'The 1 per cent rise in house prices recorded over the past 12 months can hardly be described as a strong performance, but against a backdrop of anaemic economic growth and a deteriorating labour market, UK house prices are surprisingly resilient.'

The results came in below expectations. A Reuters poll had forecast a monthly increase of 0.1 per cent and an annual 1.5 per cent rise.

On Monday mortgage lender Halifax said the number of first-time home buyers in Britain fell to a record low in 2011.

What lies ahead?

Gardner said the market is being held back by low rates and an noticeable absence of new builds springing up.

'Thanks to continued low interest rates, the number of forced sales remained low. Together with a dearth in building activity in recent years, this prevented a glut of unsold homes from accumulating on the market.

'This meant that although demand and supply were both weak, they remained relatively well-matched.'

Matt Hutchinson, director of flat house-share website spareroom.co.uk, said: 'Don't expect too much change in 2012. It may be the year of the London Olympics, but the UK property market is unlikely to make it onto the podium, let alone put in a gold medal performance.

'With lenders predicted to start hiking mortgage rates in the face of higher inter-bank lending costs, and the rising cost of living, in particular rental costs, first-time buyers will have no option but to dip into their deposit funds, and so it may only be cash-rich buyers who can take advantage of a housing market on its knees.'


Variation across the UK

House prices in Northern Ireland have been slashed to half their 2007 peak levels now, standing at £113,614.

Belfast felt the heat of this fall, with prices nose-diving by 19 per cent to average £161,326.

Overseas buyers helped push London's market near an all-time high. Prices are now just shy of £300,000 and are 1.6 per cent below their record. As a whole, the UK is 10 per cent below peak levels, Nationwide says.

Camden, Greenwich, Hackney and Westminster in the capital have all seen prices double over the last decade.

Source: ' ThisIsMoney '

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