Investing in housing has been twice as profitable as investing in gold over the past three years, ac...
Investing in housing has been twice as profitable as investing in gold over the past three years, according to a Nationwide survey.
Latest figures from the building society show that house prices increased by 67.7% to an average of £129,258, while the price for gold gained just 35.4% during the same time.
But, says Nationwide's group economist Alex Bannister, "while this makes housing look a fantastic investment, the current rate of house price inflation is not sustainable and we predict a far slower pace in the future".
Nationwide's survey shows that house prices rose 1.1% in August, a rate of increase below the 2% to 3% per month seen over the same period in 2002.
The annual rate of house price inflation was, however, slightly down to 16.6% from 17.9% in July.
Bannister says: "In contrast to the steady rise in prices over the last 8 months, activity in the housing market was relatively subdued in the second quarter of the year with turnover down 23% on a year earlier."
While price rises are set to slow, Nationwide predicts that the current strength in the market is set to continue for another couple of months.
As a result, Nationwide has raised its 2003 forecast for house price inflation to 13% from 10%.
The new forecast comes as prices in the North continue their strong run. Nationwide predicts a slowdown will happen there eventually, mirroring the slowdown in the Southeast.
Despite slower price rises, the climate for first-time buyers is not set to ease, warns Bannister.
"Given the cyclical nature of the housing market and high debt levels, a slowdown in house price growth is likely."
"In addition, earnings growth is likely to remain relatively subdued over the next few years so affordability will continue to be a constraint for those trying to get a foot on the housing ladder," he adds.
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