House Price Update to 4 August 2010

UK House Prices Situation: House prices remain broadly flat

UK House Prices Forecast: Weak demand means no growth is likely in 2010

House Prices Drop 0.5% in July – Nationwide

The latest Nationwide House Price Index shows that average UK house prices fell by 0.5% in July after having remained unchanged in June. The annual rate of house price inflation fell substantially, from 8.7% in June to 6.6% in July. This is partly the result of the big rises recorded last summer falling out of the calculations.

Nationwide Chief Economist Martin Gahbauer said that "so far in 2010, demand from homebuyers has made little progress in building upon the recovery seen in 2009." He commented that "until recently, the shortage of buyers in the market was more than offset by an even more severe shortage of properties for sale, with the result that prices rose."

This is no longer the case, despite the abolition of HIPs and a stamp duty holiday for the majority of first-time buyers. One of the problems, according to Gahbauer, remains "restrictive credit conditions". Homebuyers continue to have problems securing good mortgage deals, hindering their ability to move up the property ladder.

Halifax Figures Show Small Rise in July

The latest Halifax House Price Index indicates that average house prices rose by 0.6% in July, reversing the fall of 0.6% seen in June. This leaves the annual rate of change at 4.6%, down from 6.3% in June.

The Halifax report notes that property prices are currently 0.8% lower than at the end of 2009 but that they remain 8.3% higher than the low point reached in April 2009. The current average house price is 16% below the peak level reached in August 2007.

Halifax is maintaining its forecast of no overall change in house prices in 2010.

Read about UK House Price indexes / key statistics that track the ups and downs of house prices

Read our take on the Credit Crisis the effect on UK House Prices and Mortgages. A Special Report

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