Housing market slowdown continues
01 July 2003
House prices are showing further signs of slowing down according to the latest survey from the Nationwide building society.
The Nationwide found that house prices in the UK grew by 0.9 per cent in June compared to 1.4 per cent in May and an average 1.1 per cent over the last three months.
House prices slowed down most in London, and the building society predicts that the capital's housing market will slow further over the coming year as weakening pay and job prospects and lack of affordability affect the market.
House prices outside the capital grew the strongest with average properties in the North West and Yorkshire & Humberside breaking the landmark £100,000 barrier for the first time. The Nationwide reported that only properties in the North East, Wales, Scotland and Northern Ireland average below £100,000.
The average house in the UK cost £127,214 in June compared to £125,752 in the previous month.
However, Alex Bannister, Nationwide's Group Economist warned that the market would have significant variations at local level and across price brackets.
Mr Bannister stated, "It is likely that weakening pay and job prospects and worsening affordability will reduce annual growth further in London during the rest of the year - we continue to expect between 2-5 per cent growth this year in the capital.
"In the rest of the South East we expect to see 5-10 per cent growth which would be lower than the Midlands, where 10-15 per cent growth is likely, and the Northern regions, where growth in excess of 15 per cent is possible."
The Nationwide predicts that house sales will fall by over 10 per cent in 2003 as the "market thins", but mortgage levels are expected to remain strong as people take advantage of the low interest rates by remortgaging.
Mr Bannister added, 'A weaker UK labour market will provide a check on house price growth particularly where affordability is stretched. However, the next movement in interest rates is still likely to be down and any rise in unemployment looks modest by historical standards."