House prices are finally beginning to cool, suggest the latest statistics from Nationwide, but the v...
House prices are finally beginning to cool, suggest the latest statistics from Nationwide, but the value of homes will still be 25% higher by the end of 2002 than they were at the beginning of the year.
Property values rose by 1.4% between September and October, says Alex Bannister, Nationwide's group economist, yet this was the lowest month-on-month change since March, which indicates the market may finally be slowing down.
Indications are the South-east is still seeing the most rapid growth of house prices, however there are now concerns that further UK job cuts could soon affect confidence in the housing sector and peoples' ability to buy, says Bannister.
"High profile job losses in the financial sector (again concentrated in the South East) may also be having both a direct and indirect effect on the housing market - the latter coming through via the negative impact on job security and consumer sentiment. This and the slide in equity markets are likely to be behind the apparent slowdown in the upper end of the London market," continues Bannister.
"We expect the rate of price increase to moderate further over the course of the next twelve months.
Affordability in some parts of the market is already acting as a brake on price increases and this situation is unlikely to change in the short term. Despite expectations that economic growth will accelerate next year, there is a risk that the labour market may yet worsen," he adds.
The UK appears to be running a two-tier economy at present, because manufacturing and profit margins are down for businesses, yet property values are still climbing.
Housing market prices are up 6% over the previous three months, sales up 12% year-on-year and the average house price is now £113,665.
That said, mortgage approvals, which tend to be a good forward indicator of housing market activity, appear to have peaked, says Nationwide.
According to Bannister, Bank of England data approvals for house purchase are down from the earlier highs, from 125,00 cases in April to 117,000 in September. This combined with "weaker anecdotal evidence suggests the market may be beginning to cool".
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