Property market 'treading water' says Nationwide

Nationwide warned today that the housing market remained "subdued" despite prices rising by 0.4% last month.

The average house price in October was £165,650, the building society said, which reflected a 0.8% increase on prices a year ago.

Robert Gardner, Nationwide's chief economist, said the data was encouraging but did not change the picture of a market that is "treading water".

He said: "The outlook remains uncertain but, with the UK economic recovery expected to remain sluggish, house price growth is likely to remain soft in the period ahead, with prices moving sideways or drifting modestly lower over the next 12 months."

Howard Archer, chief UK economist at IHS Global Insight, said the underlying trend remains soft with house prices 0.2% lower in the three months to October compared with the previous three months to July.

"House prices are likely to fall by around 5% from current levels by mid-2012 in the face of low consumer confidence, persistently weak economic activity, rising unemployment and muted earnings growth," he added.

Official figures yesterday showed the number of mortgage approvals for house purchases fell in September for the first time in six months.

Loan approvals decreased 2.6% to just under 51,000 between August and September, its first fall since April, figures from the Bank of England showed.

Nationwide added that its latest analysis indicates the housing market reflects the economic uncertainty, with areas where more people in managerial and professional occupations live more active than places dominated by manual and semi-skilled workers.

House purchases in areas characterised by "wealthy achievers" had risen by three percentage points since 2008, with a small rise in the proportion of transactions in areas categorised as "comfortably off", the building society said.

The proportion of transactions accounted for by "hard pressed" areas, meanwhile, has fallen by two percentage points since 2008.

"This is not surprising, given the deterioration in economic conditions which is likely to have hit these areas hardest," said Mr Gardner.

PA