The latest house price survey by the Nationwide shows that house prices remain unchanged in June.
The survey also showed that house prices have fallen by 1.1% over the past year. The Nationwide said that house prices have been supported by low interest rates and low levels of new home building, the natural conclusion being that without these factors prices may have fallen further.
Although the housing market is still struggling there was also some good news in May with an increase in consumer confidence and unemployment falling.
Robert Gardner, chief economist at the Nationwide, said: “Stability remained the theme in June with house prices flat over the month. This left them 1.1% below the level prevailing in June 2010.
“At 0.3%, the three-month-on-three-month measure of house prices was slightly weaker than the 0.6% pace of increase recorded in May.”
“Ultimately, these positives have not been enough to make up for the ongoing squeeze on households. With debt levels still high, the need to repair household finances is undiminished,” he said.
The outlook for house prices
Despite a few encouraging signs in May the housing market is still weak with many consumers remaining nervous of rises in interest rates and an oversupply of property coming onto the market.
Richard Gardner again, “It’s hard to make the case for prices rising or falling sharply over the remainder of 2011 if the economy develops as we expect.” Gardner continued, “Economic growth looks set to gather pace in the months ahead, but is likely to remain unspectacular. This in turn points to only modest gains in employment and sluggish wage increases, which will continue to keep many potential buyers on the sidelines.”
An alternative view is held by Howard Archer from IHS Global Insight who said prices will continue to trend down over the coming months. “We suspect that modest overall falls in house prices are more likely than not over the second half of 2011 and the first half of 2012.
“On balance, we believe that house prices are likely to fall by around 8% overall from current levels on the Nationwide measure by mid-2012.”