Nationwide: House Prices in UK drop 0.1% in February
The largest building society in the United Kingdom, Nationwide, have released figures revealing that house prices fell by 0.1% in February 2015. The report also showed that the rate of price inflation had dropped to 5.7%, meaning that is has fallen for six consecutive months. Nationwideís data is centred on their approved home loans during each month.
Other data released echoes the view that the market is somewhat cooling, with the average price of a home in Britain now back at £187,964. This is down from the peak in recent times which came in August 2014 when the average was £189,306.
Among the explanations for the cooling of the market is the long-term trend of less young people and first-time buyers being able to get on the property ladder. Across the course of a decade, the number of households owning their property within the demographic of 25-34 years old fell from 59% in 2004 to 36% last year.
This fact stands in stark opposition to the data for the other age groups. In this demographic, for 2013-14, more people actually owned their property outright than paid mortgage expenditures.
However, there is separate evidence that supports a differing view of the house price market. For example, the Bank of England released a separate report revealing mortgage approvals had increased in January, the second consecutive month showing this trend. In January there were 60,786 mortgage loans approved which was up from 60,349 in the last month of 2014.
The chief economist at Nationwide, Robert Gardner, is relatively optimistic about the housing market. He stated: ìMortgage rates remain close to all-time lows and consumer confidence remains buoyant thanks to a further steady improvement in labour market conditions. The unemployment rate has continued to decline and earnings growth has picked up, particularly in inflation-adjusted terms, thanks in part to the sharp decline in energy prices.î
Mr. Gardner also said: ìThe English Housing Survey suggests that 25% of people in social housing and 61% of those in the private rental sector expect to be able to buy their own home in future. However, this remains a longer-term aspiration, with around half of renters expecting it to take five years or more to take their first steps into the housing market.î
Stephen Smith of Legal & General Mortgage Club spoke of the need for a long-term view when analysing the house price market. He commented: ìOver the past couple of years, prices have risen rapidly and are close to exceeding their 2007 peak. While this may be viewed as a positive indicator of confidence in the market, it is important not to price people out. To avoid this, and allow the market to grow in a sustainable way over the long-term, we need to build more houses.î
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