House prices 'stable' but market still suffering from lack of supply, says Nationwide

Published 01st Jun 2012

House prices rose modestly in May - their first monthly increase since February - showing a certain stability despite the double dip recession.

The average price of a home rose by 0.3 per cent to £166,022, but this followed a 0.3 per cent drop in April, Nationwide said.

Although demand is relatively weak, supply is weaker, and this lack of homes on the market is helping to keep prices up.

House prices are still 0.7 per cent lower than they were a year ago, although this is a smaller drop than the 0.9 per cent year-on-year decline seen in the previous two months.

Nationwide's chief economist Robert Gardner said: 'Demand for homes remains subdued on the back of weak labour market conditions, but the lack of homes coming on 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.'

A recent spate of soaring rents as those unable to get onto the property ladder have remained in rented homes also suggests that demand for housing is stronger than supply, the report said.

Source: ' ThisIsMoney '

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