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30/05/2003
Nationwide predicts housing market fall
Nationwide predicts a marked fall in the housing market as first time buyers are stymied due to housing affordability and the squeeze on disposable incomes.
Commenting on the figures, Nationwide's Group Economist Alex Bannister, said: "Annual house price inflation declined to 21.3% in May from 22.2% last month. The strong monthly changes between April-September last year are not likely to be matched in 2003, so we expect to see the annual inflation rate decline further in the next few months.
“In line with our expectation of a return to positive growth, UK property prices rose by 1.3% in May, having been static in April. Smaller monthly increases averaging 0.5%-0.7% are likely for the remainder of the year. This is consistent with our forecast that UK house prices will rise by 10% during 2003. We continue to believe that London will see the slowest growth of between 2-5%, with the Midlands seeing similar growth to the UK as a whole and the North seeing above average increases.
"While house prices are rising, activity levels are falling with house sales down 7% so far during 2003 compared with last year."
Last month the Nationwide highlighted that fewer first-time buyers were entering the market, mainly because of affordability issues and a drop in confidence fuelled by concerns over the wider economic outlook in the UK.
This year there have been around 117,000 first-time buyers - 23% fewer than during the same period last year.
However, Nationwide predicted that the number of first-time buyers would stabilise in coming months as confidence recovered post-Iraq and on expectations of a possible further cut in interest rates.
Nationwide also cautioned that affordability was likely to deteriorate further, as lower disposable income growth and worsening employment prospects undermined buyer confidence.
It looks unlikely that a major recovery in first-time buyer numbers is imminent.
(GMcG/SP)
Commenting on the figures, Nationwide's Group Economist Alex Bannister, said: "Annual house price inflation declined to 21.3% in May from 22.2% last month. The strong monthly changes between April-September last year are not likely to be matched in 2003, so we expect to see the annual inflation rate decline further in the next few months.
“In line with our expectation of a return to positive growth, UK property prices rose by 1.3% in May, having been static in April. Smaller monthly increases averaging 0.5%-0.7% are likely for the remainder of the year. This is consistent with our forecast that UK house prices will rise by 10% during 2003. We continue to believe that London will see the slowest growth of between 2-5%, with the Midlands seeing similar growth to the UK as a whole and the North seeing above average increases.
"While house prices are rising, activity levels are falling with house sales down 7% so far during 2003 compared with last year."
Last month the Nationwide highlighted that fewer first-time buyers were entering the market, mainly because of affordability issues and a drop in confidence fuelled by concerns over the wider economic outlook in the UK.
This year there have been around 117,000 first-time buyers - 23% fewer than during the same period last year.
However, Nationwide predicted that the number of first-time buyers would stabilise in coming months as confidence recovered post-Iraq and on expectations of a possible further cut in interest rates.
Nationwide also cautioned that affordability was likely to deteriorate further, as lower disposable income growth and worsening employment prospects undermined buyer confidence.
It looks unlikely that a major recovery in first-time buyer numbers is imminent.
(GMcG/SP)
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