House prices slip back

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The Independent Online
(First Edition)

HOUSE prices fell by 0.7 per cent in June, according to the Nationwide Building Society. But prices are still 1 per cent above the level of a year ago, writes Vivien Goldsmith.

The society reported a rise of 1.4 per cent in May while the rival house price index compiled by Halifax Building Society reported a fall of 1.6 per cent. The Halifax is likely to report little change in prices last month when it publishes

its June index next week seasonal adjustment effect . . . . .

Brian Davis, Nationwide's operations director, said: 'Too much emphasis should not be out on one month's figure. However, 'Market confidence remains fragile, reflecting the moderate pace of economic recovery and persisting concerns about employment prospects.

The initial impact of recent tax increases and a rise in fixed mortgage rates may also have been factors temporarily slowing the market's recovery.

'We continue to expect an underlying improvement in activity levels to be sustained, based on still excellent affordability and continued economic recovery.

'The outlook for prices will depend heavily on local conditions, but at national level gains are unlikely to be significantly in excess of general inflation this year.'

Robert Villiers, housing analyst at stockbrokers UBS said the fundamental economic indicators point to a recovery in the housing market although the 'feel good factor' is not yet working.

He expects house prices to end the year 3.5 per cent ahead, while the Halifax expects rises of just 2 to 3 per cent.