The housing market is cooling off as consumers lose confidence, according
to Nationwide's latest house price index.
But Nationwide says although the underlying demand for houses may have
slackened in May and the increasein prices was weaker than expected for the
time of year, there is no reason to believe the market is heading for a
Figures show the average house price rose by just £113 in May,
bringing the average price to £81,006 compared with £1,500 in
April. House prices are 16 per cent higher than a year ago although, when
seasonally adjusted, prices fell last month by 0.4 per cent compared with
an increase of 1.6 per cent in April.
Nationwide also says recent economic growth is moderately slower, meaning
the number of houses sold is lower as consumer confidence is undermined.
Nationwide divisional director (planning) David Parry says: “It is likely
the modest slowing in national house prices this month has been influenced
by the South-east. While there is scant evidence of a weakening of this
region's economy, confidence may have been affected by stockmarket jitters,
the withdrawal of Miras and fears of higher interest rates.”
Nationwide is revamping its income protection plan to allow individuals to
get up to 60 per cent of their gross earnings as a tax-free income in
addition to state benefits if they are unable to work.
Nationwide Life managing director Bill Tonks says: “Long-term incapacity
benefit paid by the Government in the event of illness will not enable many
people to maintain their normal lifestyle. It is therefore important to
make provision to ensure your income is not heavily reduced in the event of
accident or illness.”