The Deputy Prime Minister, Michael Heseltine, joined the argument over the state of the housing market yesterday, seizing on new figures from the Nationwide Building Society which predict that house prices will rise by 3 per cent in 1996.
In contrast to yesterday's assertion by the Labour Party that the market is still suffering from stagnation, repossessions and negative equity, Mr Heseltine said, "The New Year will start with an encouraging boost to the housing market. Both the Halifax and the Nationwide reported house price increases in November. Building society net new lending in November was at its highest since mid-year."
"Unemployment has been falling for 27 months, thus increasing a feeling of job security and a willingness to invest. House prices are at histori- cally low levels in relation to incomes."
"There could well be a pick-up in demand by first-time buyers, waiting to enter the market before prices begin to move up," Mr Heseltine concluded.
The survey by the Nationwide suggests that the number of homes changing hands next year could increase by 10 per cent, after falling by a similar amount in 1995, and could lead to a rise of 3 per cent in the average price of houses, after a fall of 2.5 per cent in 1995.
Nationwide's forecasts are very much in line with the leading building society the Halifax, which on Tuesday forecast a 10 per cent rise in activity and a 2 per cent average increase in prices next year, rising to 5 per cent in 1997. The Halifax's forecasts prompted Nick Raynsford, Labour's housing spokesman, to contradict any suggestions that the housing market is set to recover.
Industry spokesmen, however, pointed out that although the Nationwide survey shows that house prices rose 1.5 per cent in November, it also shows that they fell 1.2 per cent in December, reducing the average price of a house in the United Kingdom to pounds 50,798, down from pounds 52,092 a year ago.
Nationwide's actual forecast is also couched in low-key terms. It blamed the weakness of the housing market in 1995 on low confidence and poor growth in personal incomes. Brian Davis, the society's chief executive, commented: "Although still tentative, there have been some signs in recent months that the market has at least stabilised.
"This is in accord with our own reading of recent mortgage lending data, which suggests the decline in market activity has been halted. Stronger growth in personal incomes and a very favourable interest rate environment should provide the conditions necessary to support an improvement."Reuse content