House prices start to slump
The slight housing recovery that the UK witnessed during the final quarter of 2009 has come to an end as early figures suggest that the average house price fell 1% to £161,320 in January. The figures released by the Nationwide building society for the house price index show that this figure is still 13% lower than that of October 2007, but is an improvement of 9% seen in February 2009.
Nationwide have said that they do not foresee this as the start of a trend as it is too early to tell. We will get a full understanding of the situation when the figures for the first quarter are released in April.
However it is likely that this report will trigger uncertainty in the lending market leaving potential buyers short when looking for a mortgage. This has not come as a shock to many as the end of the stamp duty holiday was expected to bring a fall in the number of house purchases.
Nationwide's chief economist, Martin Gahbauer said: "New buyer inquiries dropped sharply in the new year and there was also an associated drop in the number of new mortgages taken out by homebuyers in January. At this stage, it is difficult to gauge how much of the drop in housing activity is attributable to one-off factors."
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March 03rd 2010