House Price Update to 7 September 2011

UK House Prices Situation: Sellers and buyers at odds; prices hovering

UK House Prices Forecast: No growth likely in most areas of UK; falls possible

House Prices Down 0.6% in August

Average UK house prices fell by 0.6% in August, according to the latest instalment of Nationwide's House Price Index.

The fall follows a 0.3% rise in July and leaves the annual rate of change at -0.4% and the average house price at £165,914.

Robert Gardner, Nationwide's Chief Economist, said that the fall "doesn’t change the picture of relative stability that has characterised the market over the past twelve months. Indeed, prices were broadly unchanged compared with August 2010 – just 0.4% lower."

Gardner's point that 0.4% hardly constitutes a significant change is important – all the more so since so few houses are changing hands, compared to historical average levels.

However, Nationwide's report emphasises several times that the 'downside risks' – economist-speak for problems that are getting worse – are growing. Gardner comments: "A further fall in employment would be likely to upset the relatively delicate demand-supply balance and put downward pressure on prices."

RICS Expects Low Volumes to Persist

The Royal Institute of Chartered Surveyors (RICS) has said that it expects low volumes of housing transactions to persist "until the banking sector returns to health".

However, it does not expect major falls in house prices, saying that "While we do not rule out further modest falls in prices, at this stage we see the risks of another material correction [i.e. a big fall] as limited given the severe undersupply of new homes."

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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