Skip to content

Weak property market outlook for UK as prices stagnate

House prices increased by 0.1% compared with the previous month and are now 0.3% lower than a year ago with the average price at £166, 256 compared with £165,914 in August.

On a quarterly basis most regions saw relatively small price movements with seven regions seeing price rises and the remaining six seeing falls, the index also shows.

The Outer Metropolitan region saw the strongest quarterly growth, with prices up 1.6% quarter on quarter. This pushed the annual rate of growth up to 1.3%, making the Outer Metropolitan the top performer on an annual basis.
Amongst the other English regions, the North West saw the largest price falls over the last 12 months, with prices down 2.4% compared with the same period in 2010. London saw a 1.9% quarter on quarter fall in the third quarter, although annual growth remained in positive territory at 0.5%.
Scotland saw a 0.5% quarter on quarter fall, with the annual rate of change remaining negative at -1.1%. Prices were lower than one year ago in all areas, although Dunbartonshire and North Lanarkshire was the best performing area. Dundee and Angus remained the weakest performing area, with a 6% year on year fall.

Wales recorded its third consecutive quarter of price rises, with a 0.2% increase in the third quarter and this pushed up the annual rate of change from -0.9% to 0.2%. Cardiff was the weakest performing area, with a 2% year on year fall. The South Wales (East) sub region, which includes Blaenau Gwent, Caerphilly, Merthyr Tydfil, Monmouthshire, Newport and Torfaen, was the strongest performing area.

Northern Ireland saw a 4.1% quarterly fall, leading to a deterioration in the annual rate of change from -4.1% to -9.3%.

The dearth of new homes coming on to the market has been an important support for UK house prices over the past 12 months, according to the Nationwide. The pace of new house building has slowed sharply in recent years. Combined with low levels of distressed sale, in part the result of the ultra low level of interest rates, this has prevented the market becoming oversupplied, despite the on going weakness in demand for homes in the aftermath of the 2008 economic downturn,  said Robert Gardner, Nationwide's chief economist.

‘Sluggish demand for homes on the back of weak labour market conditions, combined with only a gradual rise in the supply of available properties, has helped to keep property prices fairly stable since the summer of 2010. We expect this trend to be maintained over the remainder of 2011, although downside risks have increased as UK and global growth prospects have weakened,’ he explained.