Nationwide's latest monthly house price survey reports that the average house gained 1.3% in value i...
Nationwide's latest monthly house price survey reports that the average house gained 1.3% in value in May, but adds that this headline figure masks a considerable fall in demand from first-time buyers and others because of affordability and general apprehension about the state of the economy.
The number of first-time buyers has dropped 23% across the country, and more than 30% in the Southeast compared to the first five months of last year, and overall sales dropped 7% in May this year compared to the same month last year.
Nationwide has now downgraded its forecast for the total number of house sales this year, to 1.4 million from 1.55 million forecast in December last year.
This month's 1.3% inflation figure also does not dissuade Nationwide from predicting a continued slowdown in house price growth to 10% on average by the year-end - double the rate forecast by Hometrack, which released its own house price survey earlier this month.
Prices in London will grow as little as 2% on average this year, Nationwide says.
Instead the mortgage market is being firmly driven by re-mortgaging as homeowners have made a record £32bn in equity withdrawal since the start of the year – up 65% on the same time last year.
Nationwide expects the rate of equity withdrawal to slow through the rest of the year, although there may be no let-up in the rate of borrowers switching lenders – more than half a million have done just that so far this year to take advantage of the record low interest rates now on offer.
The weak dollar and continued poor growth in Europe are creating significant risk for the UK economy and housing market, the lender says, which means another interest rate cut is to be expected.
Two global vehicles
'Further plug advice gap'
Must appoint separate CEOs and boards
Advisers do come out well
Will report to Mark Till