Though house prices may be falling, Nationwide is reporting that the latest figures show the annual rate of property decline is easing, according to thisismoney.co.uk. This is due to cash rich homebuyers taking an interest in cheaper property and those with big deposits choosing low mortgage rates.
The past couple of months have been surprising with April?s fall of 0.4 per cent following March?s surprise jump of 0.9 per cent. April?s annual rate of decline eased to 15 per cent though, lower than March?s 15.7 per cent.
House prices in April were down by 3.1 per cent, 1 per cent lower than March (4.1 per cent) and almost 2 per cent lower than February (4.8 per cent). The average home is now worth ?151,861, as in June 2004.
Nationwide?s chief economist Fionnuala Earley said: ?The housing market is very sensitive to income and, as a result, conditions in the labour market are crucial to its performance. Even though negative inflation will mean that real earnings will be increasing, it is likely to be some time before this feeds into a strong enough change in sentiment to encourage a full scale revival in the housing market.?
Nationwide forecasted that prices are expected to fall over the next six months but at a slower rate than the previous months, with buyers being cautious.
Howard Archer, chief UK economist at analysts Global Insight has mixed feelings about the situation: ?There are increasing signs overall that housing market activity may have passed its worst point, helped by the substantial fall in house prices from their 2007 peak levels and sharply reduced mortgage rates. Nevertheless, housing market activity remains very low by past norms and our expectation is that the pick up will be both gradual and fitful for an extended period given very poor economic fundamentals and still relatively tight credit conditions.?
