Nationwide: House prices fall 0.4% in April and Budget will do little to help

30 April 2009 / by Rachael Stiles
Average house prices have fallen again this month, by 0.4 per cent, according to the latest house price index from Nationwide.

The average house in the UK is now worth £151,861, down from £150,946 in March and 15 per cent lower than it was in April 2008.

This is in contrast to March's movements in the house price industry, which saw prices make a small recovery, rising 0.9 per cent compared to February's results.

Whilst this marks another dip after some signs of improvement in March's figures, it is in line with expectations, says Nationwide's chief economist Fionnuala Earley.

This month's fall in prices "reverses some of the rise seen in March, but is

in line with our expectations, given the current economic conditions," Ms Early said. "The 3-month on 3-month rate of change, generally a smoother indicator of the short-term trend in prices, improved to -3.1% in April from -4.1% in March,"

And, Nationwide said that while the measures announced in the Budget last week are welcome, they are unlikely to make a significant difference, as a range of economic conditions continue to dominate the housing market.

"The chancellor announced several measures aimed at boosting the housing market in his Budget," Ms Early commented on Mr Darling's plans. "The scheme for government guarantees for new, high-quality residential mortgage backed securities are welcome and may help to boost the amount of mortgage credit available."

But she thinks that the other factors involved in slowing down the property market, not just the lack of available credit, will mean that the Budget's measures are "unlikely to lead to a swift turnaround in its fortunes."

She elaborated: "Lenders have already indicated that the availability of credit is less of an issue than it has been, but at the same time expect that the demand for secured lending will fall further. Given the weakness of the economy and the expected further increase in unemployment this comes as no surprise."

Commenting on the Nationwide house price index, Simon Rubinsohn, chief economist at the Royal Institute of Chartered Surveyors (RICS) said: "The resumption of a downward trend is not a surprise and broadly consistent with the main indicators contained in the RICS monthly Housing Market Survey.

"Both the price balance and the price expectations series remain deeply in negative territory suggesting that the pricing cycle has yet to reach a trough."

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