May saw the second monthly house price increase in the past three months reported by the building society, which means the average house price now sits at 154,016.
Year-on-year data reveals house prices are 11.3 per cent lower than they were in May 2008. Nationwide’s March figures showed house prices were up by 0.9 per cent month on month but then they dropped back 0.4 per cent in April.
Meanwhile, Hometrack data for May shows house prices unchanged after they dropped back 0.3 per cent in Aril and 0.6 per cent in March. The Hometrack figures show that compared to May 2008, prices were down 9.6 per cent. Hometrack found the percentage of the asking price sellers achieved showed an improvement in May at 90.3 per cent compared with 89.6 per cent in April. The average length of time that properties remain on the market improved somewhat in May from 10.4 weeks in April to 9.9 in May.
Nationwide chief econ-omist Martin Gahbauer says that it is still too early to say that the market is turning definitivelyHe says: “During the downturn of the early 1990s, there were many months during which prices rose, only to fall back down again in subsequent periods. In the current downturn, the combination of rapidly rising unemployment and tight access to credit implies that the last of the price declines has probably not been seen yet.
“Nonetheless, the improvement in house price trends is consistent with signs of stabilisation in several other economic indicators and suggests that any further price declines may occur at a less rapid pace than in 2008.”
Gahbauer says one possible reason for the increase in price is the lack of housing stock in the UK. He says: “House sales still remain close to record lows so that the improvement in the supply-demand balance is so far mostly attributable to a dec-line in the stock of property on estate agents’ books.
“Recent anecdotal evidence suggests that there has been a large rise in sellers choosing to let their properties instead of holding out for a buyer, which could explain at least part of the fall in stock levels.”
Hometrack director of research Richard Donnell says the outlook for the housing market remains fragile, with a number of factors that could well derail the recent pick-up in market activity.
He says: “Given the weak outlook for the economy, house prices are expected to remain under downward pressure for the foreseeable future. Over the last two years, estate agents have carried out an aggressive repricing of the market in an effort to try and stall the unprecedented decline in transaction levels.
The survey shows that pricing expectations among vendors has finally realigned to a level that is more in line with what the current pool of purchasers are prepared to pay.”
Donnell says overall levels of market activity are well down on what would constitute normal market conditions.
He says: “The willing purchasers that are retur- ning to the market are largely confined to the more wealthy areas of the country and limited to those buying with cash or who require low loan to value mortgages.”
For a full market recovery, Donnell says there needs to be a broader range of buyers able to access the market and at the moment, most first-time buyers still remain excluded.