The latest Nationwide House Price Index update is out showing a decline of 0.1% in January 2011. That brings house prices down 1.1% since this time last year. Nationwide has a new Chief Economist, Robert Gardner, who writes:
"The property market entered 2011 with a whimper rather than a bang, with house prices edging down slightly in January. Prices fell by 0.1% month-on-month, leaving prices 1.1% lower than January 2010.
"January’s data does little to alter the picture of a sluggish market that has been evident since the summer. Indeed, the three month on three month measure of house prices, which is a better measure of the underlying trend, showed a fall of 0.5%, consistent with the gradual moderation in prices that has been in place since the summer of 2010.
"The outlook is still highly uncertain, but the most likely outcome is that the pattern of low transaction levels and prices moving sideways or modestly lower will continue through 2011.
"Demand for homes looks to have stabilised, albeit well below the levels prevailing before the crisis. Interest rates remain at historic lows, and labour market conditions have stabilised – both factors that will provide support to the market. However, the continued uncertain outlook for the economy will probably continue to keep many buyers on the sidelines.
"At the same time, there are few signs of a glut of unsold homes building up on the market that would lead to a sharper price correction. Indeed, there are tentative signs that the volume of homes coming onto the market may be slowing."
The data seem to be pointing in the same direction as in the U.S., to a double dip in prices. Gardner sees prices ‘treading water’ in 2011. At this point that is the best one can say given the uncertain economic outlook in Britain.
A clip of Gardner talking to Bloomberg is below. He talks of robust growth in Germany potentially helping the UK economy near the end of the clip. I see things differently. Germany threw in a negative retail sales number this past week. That means internal demand in Germany is still sluggish. The German economy is benefitting from export growth and not from internal demand from which the UK can also benefit. For now, the UK economy will remain weak.