House Prices Down by 0.1%

property-price-drop-2011It sounds such a silly little figure, doesn’t it, 0.1%? Probably it was this sentiment that caused the Guardian to report the latest Nationwide figures as the property market started the year with a whimper rather than a bang.

Year on year figures perhaps help put things in perspective – this January figures were 1.1% down on last January’s, with an average price of £161,602.

Robert Gardner, of Nationwide, is reported as saying:

“January’s data does little to alter the picture of a sluggish market that has been evident since the summer. Indeed, the three-month-on-three-month measure of house prices, which is a better measure of the underlying trend, showed a fall of 0.5%, consistent with the gradual moderation in prices that has been in place since the summer of 2010. The outlook is still highly uncertain, but the most likely outcome is that the pattern of low transaction levels and prices moving sideways or modestly lower will continue through 2011.”

We have to assume that an increase in the cost of living, as evidenced by the latest inflation figures, has negatively effected demand for housing.  Will these latest figures cause the Bank of England to raise interest rates?  The general consensus seems to be that this will not happen until the second half of this year and even then the rise will be a gradual one.

As far as the housing market is concerned, the view taken by the experts seems to be that although prices will continue to fall this year we are not headed for a property market crash.

Despite this, the housing market is stagnant – borrowers unsurprisingly lack the confidence to take out new mortgages or increase existing ones.

Perhaps a sign of the times is that during December 2010 total lending to individuals reduced by £117m – this figure includes both secured and unsecured loans – only the third time this has happened since records began.

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