Nationwide: House prices down 0.8%

Thursday, 29 November 2007 12:00 AM

There was more bad news for the UK housing market today as figures from the Nationwide building society reveal average property prices are down.

Average property prices were down by 0.8 per cent over November, following a 1.1 per cent increase in October.

The fall means annual average house price growth falls to 6.9 per cent, with the average property now costing £184,099.

The 0.8 per cent monthly fall is the first since February 2006 and the largest monthly fall since June 1995.

However, the figures should be taken in context.

"Monthly data can be volatile and the sharp fall this month is partly a reflection of the strength recorded last month and in November last year," said Fionnuala Earley, Nationwide's chief economist.

"A better picture of the underlying trend is captured in the three-monthly growth rate."

This rate, however, also fell - in line with a softening market - down to 1.5 per cent from 1.8 per cent last month.

"November's data confirms that the housing market is indeed cooling in line with the weakening in housing market drivers," continued Ms Earley.

"Poor affordability, weaker house price growth expectations and the effect of earlier increases in interest rates have all affected demand in the market."

Another indicator of a falling market was the number of house purchase approvals, which have fallen from a peak of 128,000 a month in the final months of 2006 to 102,000 in September.

The introduction of home information packs (Hips) could also have an effect on the market in the future.

The government announced the scheme would be compulsory for all properties from December 14th, but the impact on the market is hard to determine, according to Nationwide.

"The scheme could speed up the process by removing those not serious about moving, but it is likely to reduce the numbers of speculative sellers which could limit the available supply and make the house search process longer.

"The final outcome is likely to depend on the importance of speculative sellers in the market, which is difficult to judge," concluded Ms Earley.

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