House prices in the UK are falling, says Nationwide

House prices in the UK are falling, says Nationwide

	Published : Thu, 30 Jun 2005 12:35 By : Andrew Stead Print this Story

LONDON: There has been a 0.2 per cent fall in house prices across the U.K. in June compared with May, according to Nationwide, the U.K.'s largest building society. The annual growth rate too recorded the lowest figure in June since July 1996, it said.

An average house is now priced at 157,791 pounds, compared with 157,272 pounds in May.

The growth rate annually fell to 6.1 per cent in the second quarter from 9.9 pct in the first quarter and 19.4 pct in the corresponding quarter last year.

Nationwide said in May the house prices had recorded 0.3 per cent rise, while in the second quarter, there is a rise of 1.2 per cent from the previous quarter.

Analysts feel there is no cause for immediate worry as Bank of England has released figures suggesting mortgage lending has actually gone up. But the survey results as also the evident stagnation in housing activities may lead to speculation about possible interest rate cuts immediately.

Regionwise, Scotland and Northern Ireland recorded the strongest annual rate of house price growth (the only regions in the whole of the country where the rate remains in double digits) while London and the South East experienced the weakest rates.

For the whole of 2005, the strongest regional growth could be in Northern Ireland, says Nationwide. The value of homes there is expected to appreciate by 4 per cent on average. Areas like Scotland, London and outer metropolitan areas will witness a 3 per cent growth.

Nationwide's group economist Fionnuala Earley highlighted the stagnation and said, "Estate agents continue to report stalemates between buyers and sellers on price and without any economic pressure on sellers to reduce prices at the moment, the stock to sales ratio looks set to rise."

She said many would-be house buyers are adopting a "wait and see" approach in the light of uncertainty on interest rates.

Nationwide feels if the interest rates are cut, there could be two competing impacts on the housing sector -- boost in activity with more buyers in the market but a possible negative impact too of consumers becoming more wary of the uncertainties.

Halifax, the U.K.'s largest mortgage lender, which will come out with its June report next week said the annual house price growth had been 3.2 per cent in May.