The world economic slowdown has taken its toll on the 'unsustainable' growth of the housing market, with prices falling last month for the first time since February.
Nationwide said prices dropped by 0.5% in October, but with an average house price of £91,653 they are still 13.1% higher than a year ago. Nationwide's chief economist, Alex Bannister, says: “There has only been a modest easing in the upward trend in price growth, despite uncertainty over September 11. This is because households remain generally confident about their own financial prospects and the outlook for the housing market.”
The report warns that consumer confidence will fall in the coming months, as earnings and employment growth are set to decline. However, it concludes that the UK should avoid recession, with only a modest increase in unemployment.
Halifax's house-price figures are released tomorrow. Group economist, Martin Ellis, says: “Our figures will probably show that the housing market is continuing to slow, and we think that will continue over the rest of this year and into next year.”
He adds: “These surveys are very similar, but are based on our respective customer bases. Building societies have lost a lot of market share this year and this may well have had an impact on the Nationwide sample. These surveys do, nevertheless, give a good broad brush of what is happening in the market.”
Phillip Ambler, a broker with Chesterfield-based B Ambler Independent Financial Services, says: “House prices will be stable, but the trend for high and increasing house prices will peter out. Houses are starting not to sell at these very inflated prices any more.”