Recent statistics from the Halifax show that house prices have risen for the second month in a row, suggesting that the market is still healthy. The bank recorded a slight rise of 0.2% in the average property value for August, to go on top of the 0.7%. rise that was cited in July. However, this was in contradiction to its big rival lender, Nationwide, whose statistics showed a 0.9% fall in property prices during the month.
Halifax says that house prices have grown by 4.6% over the last twelve months and that the average house price now stands at £167,953 – Nationwide put that figure at £166,507. According to some financial analysts, the mixed messages emerging from the big lenders suggest that the market is entering a period of stagnation.
Commenting on the latest statistics, Halifax’s Chief Economist, Martin Ellis, said: “This, together with July’s rise has reversed much of the modest decline in the three preceding months. Prices are now at a very similar level to that at the end of last year. Activity has also been largely static since the start of the year. These developments suggest that the market is broadly stable with house price inflation having cooled since last year when supply shortages helped to push up prices.”
Conversely, Martin Gahbauer, the Chief Economist for Nationwide said that “the current correction is not an unhealthy development” about his building society’s 0.9% cited house price fall. He also added that “the current price decline is likely to remain modest.”
Although some analysts are talking about a period of stagnation for the market, others are predicting a fall in prices. The most dramatic of which is IHS Global Insight who have said that house prices will be 10% lower than they are now by the close of 2011. The influential Ernst & Young ITEM Club agree on a downward trend, as it predicts more modest falls of 3-5% over the next year.
One thing that everyone is agreed on though, is the fact that the effects of economic slowdown will be felt differently across the country. Spending cut backs and public sector cuts are more likely to affect areas outside of London and the south east. Property prices in the ever-buoyant capital and its commuter areas are likely to remain more resistant to those in other areas of the UK.
Richard Hatch of property consultancy, Carter Jonas, sums the current situation up well when he suggests that the market is “simply readjusting after getting ahead of itself.” This is not so much a reference to the big property boom that ended in 2007, but rather to 2009, when property continued to rise in value, despite the country being in recession.