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House prices drop in April

The price of a typical house fell by 0.4 per cent in April according to the latest Nationwide House Price Index.

Last month the building society reported a “bounce” as prices increased by 0.9 per cent, but its latest report has found prices have dipped once again; the annual change is now -15.7 per cent. It says the average house is £151,861.

Nationwide chief economist Fionnuala Earley says: “The chancellor announced several measures aimed at boosting the housing market in his Budget. The scheme for government guarantees for new, high-quality residential mortgage backed securities are welcome and may help to boost the amount of mortgage credit available.

“However, since the availability of credit is only part of the reason why the housing market is in the doldrums it is unlikely to lead to a swift turnaround in its fortunes. Lenders have already indicated that the availability of credit is less of an issue than it has been, but at the same time expect that the demand for secured lending will fall further. Given the weakness of the economy and the expected further increase in unemployment this comes as no surprise.

Email Mortgages.com chief executive Michael White says: “There was a large degree of scepticism last month when Nationwide revealed a monthly increase, and a return to a monthly fall in April seems to show the market was right to be cautious about any perception that house prices had reached their floor and were on the rise again.

“Having said this, there may be some degree of cautious optimism giving that the percentage falls seem to be smaller month-on-month. Anecdotally at least there appears to be more positive signs in the housing market particularly from estate agents who seem to be suggesting that buyer interest is on the increase, although this may be down to the ‘Spring effect’ and the better weather allowing more people to get out and view properties. Hardly the best market indicator to suggest a full-scale turnaround in house price levels any time soon.

“The housing market is definitely not off the life support machine yet, let alone showing sustained signs of recovery.”

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