Does the rise in UK house prices change the underlying picture?

Nationwide Chief Economist Robert Gardner doesn’t think so? Yesterday, he spoke on CNBC Europe about why he sees continued housing stagnation in the UK. Gardner says an improvement in the labour market is what the UK needs to see the housing market improve. This is a 2012 event in his opinion.

On the Nationwide website, Gardner wrote:

"Housing market trends are closely linked to wider economic prospects. Given that the recovery hit a soft patch at the turn of the year and looks set to remain sluggish in the year ahead, the property market is likely to follow suit, with relatively low transaction levels and prices moving sideways or modestly lower through 2011.

"Demand for homes has levelled out, supported by historically low interest rates and some stabilisation in the labour market. The continued uncertain outlook for the economy is likely to keep many potential buyers on the sidelines for some time yet.

"Nevertheless, there are few signs of a glut of unsold homes building up on the market. Sellers remain reluctant to accept lower prices to secure a sale. In fact there are tentative signs that the volume of homes coming onto the market is slowing."