House prices in the U.K. up for first time since Oct 2007
House prices increased in March in the U.K. according to Nationwide Building Society. Below is what Nationwide’s Chief Economist Fionnuala Earley had to say about this surprise good news:
“Spring brought a surprise bounce to house prices in March. The price of a typical house increased for the first time since October 2007, rising by 0.9% during the month and reducing the annual rate of fall from -17.6% to -15.7%. This brings the price of a typical house to £150,946. The moderation in the annual rate of fall is somewhat distorted by conditions last year and so it would be unwise to draw strong conclusions from the significant slowdown in the annual rate of fall. Equally, while the rise in prices in March is welcome, it is far too soon to see this as evidence that the trough of the market has been reached. The Bank of England has already taken strong measures to ease the tensions in economic and financial markets by cutting rates and commencing quantitative easing. However it will take time for these to work through into the housing market before we can expect a sustained recovery in house prices.”
I have been especially negative about the U.K. and Irish housing markets. However, you should note that the comparisons to last year are much better for March than they were for February. Obviously, this is just one month’s data. Let’s see if this uptick is a harbinger of better things to come.
Surprise Bounce to House Prices – Nationwide
Why is a rise in any price good news? Anyway, it’s a mere blip on the way down from absurdly over-inflated levels. Remember HBoS reported a similar blip in January only for their index to continue its inexorable and long-overdue decline to reasonable levels.
Bruce, it is good news only because a slower decline in house prices right now will give banks and consumers in the U.K. a better chance of avoiding a deflationary spiral.
PS: That didn’t last long! Halifax says house price inflation is minus 1.9% for the same month.
I am highly skeptical about any price increases being more than temporary. It would be nice to see a slowing here, but rather unexpected. And you should note that Fionnuala Earley at Nationwide has always been unrealistically upbeat about spinning what the numbers mean. Her analysis this month was more guarded than it has been.
I reckon we will see a reversal of these numbers going forward.
Is this an increase in asking prices or prices achieved. Few people move at Christmas or in the winter, the spring always sees an increase in activity.
All who are about to buy we salute you!
Mark, these are sales. But, this does look to be a monthly blip because prices are still way too high, especially for first time home buyers. You probably saw the Halifax showed prices dropping.
By the way, Lord Mandelson was recently in the news saying that Britain was not averse to taking on IMF funds. That is testament to the seriousness of the problem in the U.K. I think.
Comments are closed.