Nationwide says house price inflation is ''gently softening'' |
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Thu, 28 Jul 2005 17:35
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The Nationwide building society has released the figures for the month of July and these show that the UK house price inflation has hit a nine-year low and there is little hope for recovery in the near future.
The annual inflation rate stood at 2.6 percent this month down from 4.1 percent in June. However, house prices were 0.2 percent higher in July as compared to the 0.2 percent drop in June. Nationwide said that the housing market was lifeless since December last year. These thoughts were echoed by analysts who said that the fluctuations seen between June and July reiterated the fact that the market was "paralysed."
Howard Archer, Global Insight’s chief European economist did not predict any better figures in the future as well, “The data show there has been some seasonal pickup in housing market activity, but it’s been a fairly subdued pickup compared with past years. The housing market may be relatively flat for a year or two, but we don’t see a sharp correction," he said. However, the anticipated rate cuts next month could serve as a balm to the market in which "the overall picture remains one of a gently softening market."
Fionnuala Earley, Nationwide's group economist was also hopeful that the rate cuts could salvage the market, "On the upside the global economy is not collapsing and the Chancellor’s decision to extend the economic cycle will buy more time before taxes have to increase. On the downside, the underlying picture could be more downbeat than previously thought and this could in turn impact on the labor market more swiftly," she said adding that the role of the macro-economic developments were vital in the process.
She felt that the terrorist attacks could have some impact in the long run, "Threats of further attacks may upset confidence enough to cause consumers to stay at home," she said.
The price of an average home in the UK was pegged at £158,348 in July as compared to £157,791 in the last month.
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