AND JOHN WILLCOCK
House prices were flat in February, according to Nationwide Building Society. The average, at £53,075, was 0.7 per cent lower than in February 1994, continuing the past year's trend.
Philip Williamson, Nationwide's director of business planning, said: "This month's index figure mirrors the generally flat housing market we have experienced since the spring of last year." Mortgage advances, estate agents' transactions and builders' reports all pointed to weak activity.
The building society sees little prospect of improvement in the immediate future, with a number of factors likely to dampen the housing market. These include reduced mortgage interest relief from April, limits on income support for mortgage payments, and more tax increases in the pipeline.
Nationwide predicts higher house prices later in the year thanks to falling unemployment. It thinks prices could rise 2-3 per cent in 1995, with turnover in the housing market up 5 per cent. "However, even these modest gains are vulnerable should interest rates rise more sharply than we currently anticipate."
The chief executive of Woolwich building society, Donald Kirkham, agreed that any recovery in the housing market would be modest. Presenting the society's results yesterday, he forecast a rise in house prices of about 2 per cent. Despite falling joblessness, job prospects were still uncertain and many homeowners still had mortgages bigger than the value of their homes.
In 1994, Woolwich more than halved its provisions against bad debts, from £123m down to £55.9m. This helped produce a pre-tax profit of £302.7m for the year to December against £228.5m last time.
The declining provisions reflected the economic recovery and declining repossessions, said the society.
Woolwich concentrated on cost control and cut its administrative costs as a percentage of mean total assets to 1.32 per cent from 1.35 per cent.Reuse content