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6% house price rise is forecast - By Jane Padgham (Economics Correspondent)

Evening Standard – 1 March 2005

The housing market appears to have bottomed out, Britain’s biggest building society said today as it unveiled another rise in property prices.

If the current pace of increase persists, Nationwide expects prices will rise by just under six per cent in the year to December.

The society said the average price of a home rose by 0.5 per cent to £152,879 in February following a 0.4 per cent gain in January. The year-on-year rate of increase slowed from 12.6 per cent to 10.2 per cent, the weakest since June 2001.

After cooling dramatically in the second half of last year, the market is showing signs of stabilising as homeowners and prospective buyers adjust to last year’s flurry of interest rate rises.

However, activity remains more subdued than during the housing boom. Price rises have averaged 0.3 per cent a month over the past three months compared with 1.7 per cent over the same period a year ago.

Alex Bannister, Nationwide’s group economist, said: “Market activity, which has been slowing throughout the second half of last year, appears to have bottomed out.”