| News
Property drifts towards years of no growth
Nationwide, Britain’s biggest building society, told the Sunday Times last week that house prices could stay flat or even fall in 2011 and 2012 despite the recent rally, adding to growing fears of a “double dip” in the property market.
It has also forecast no growth for this year — meaning prices could stagnate for a full three years.
Figures from Halifax this month showed the recovery started to slacken in January with a 0.6% rise in property values — the lowest monthly increase for six months.
Nationwide’s index was more bullish, saying house prices rose by 1.2% last month and are up 8.6% year-on-year. It thinks house-price inflation could top 10% next month, before falling back as interest-rates start to rise and unemployment ticks up next year.
Meanwhile, Jones Lang LaSalle, the property group, said it expected prices to fall 3% this year.
James Thomas, head of residential development and investment at the company, said: “With the general election and the end of government stimulus measures, the demand for housing will remain fragile.”
However, some commentators are more bullish. The Centre for Economic and Business Research (CEBR) has revised up its forecast on house prices from a 4% rise to 6% over 2010, on the basis that interest rates will remain low. It also expects mortgage approvals to rise.
While house prices were likely to falter again in 2011, values would rise 20% by 2013, it said.
Homeowners are being urged to take advantage of the “remortgage window” brought about by a combination of lower mortgage rates and higher house prices, which has restored some of the housing equity wiped out in the slump.
The more stable housing market has allowed lenders to come in with some better deals in recent weeks, but they could be as good as it gets.
The cost of wholesale funding rose slightly last week. Three-month Libor — the rate lenders pay on funding for variable mortgages — rose to 0.63%, the first increase since it began falling steadily in September.
|
