Average property prices fell 0.3% in November on top of a 0.7% slide in October, as activity in the housing market remained subdued, according to the latest figures from Nationwide published today (Wednesday December 01).
The typical house now costs £163,398, just 0.4% higher than a year ago, after prices fell or remained unchanged every month for the past six months.
The figures, which come just days after the Bank of England reported a further fall in the number of mortgages approved for house purchase, are likely to increase concerns among economists that house prices will suffer a double digit drop during 2011.
But Nationwide said there was no reason to expect the rate at which prices are dropping to accelerate, adding that an anticipated fall in the number of people selling their homes in the coming months was likely to offer some support to prices.
Nationwide also said that its quarter on quarter index, which is generally seen as a smoother indicator of market trends, actually improved slightly during the month. Prices fell by 1.3% during the three months to the end of November, compared with a 1.5% slide during the previous three month period. This is well above the deeply negative rates of -5% to -6% that prevailed during the most severe phase of the downturn in 2008.
‘There is little evidence to suggest that house price declines are likely to accelerate in the months ahead. Much of the weakness in property values since the spring has been driven by a return of sellers to the market, following unusually low levels of property for sale in 2009 and early 2010. However, there is little to indicate that these sellers need to achieve a sale urgently for financial or economic reasons, which means that the downward pressure on house prices is only modest,’ said Martin Gahbauer, Nationwide’s chief economist.
‘In addition, there are early signs that the flow of new property onto the market may be slowing down again as potential sellers observe the recent weakness in prices and decide against marketing their properties at the current juncture. Similar seller behaviour was observed in late 2008 and early 2009, eventually leading to a decline in the amount of property on the market,’ he added.
Other reports have also shown home values are declining. A report by Hometrack earlier this week showed that house prices fell for a fifth month in November and last week the latest index from the Land Registry said prices dropped in October.
