Figures reinforce housing fragility

NIC CICUTTI

The fragile state of the housing market was underpinned yesterday by figures from Nationwide Building Society showing that house prices dipped by 0.3 per cent last month.

But some experts claimed that Nationwide's monthly report was only part of a larger set of statistics showing that the market was on the mend.

Their claims are set to be bolstered today by a second price survey from Halifax Building Society, showing that house prices rose slightly in October, the third month in a row.

Nationwide's own survey showed that house prices were now 3.9 per cent lower than they were at last year's peak, with average prices now down to pounds 50,807.

Philip Williamson, a divisional director at Nationwide, said: "Activity remains weak, with transactions likely to be around 10 per cent lower than in 1994. Nevertheless, there are signs that the market has at least stabilised.

"Latest Inland Revenue data suggest that the downward underlying trend in transactions has almost come to an end. Mortgage approvals have also strengthened somewhat since the summer."

Separate data from the Bank of England showed that net lending, secured by property, rose slightly to pounds 1.25bn in September, up from pounds 1.17bn the previous month. The number of loans approved in September dropped to 71,000, from 76,000 in August.

Ian Shepherdson, an economist at HSBC Greenwell, said: "What we are seeing is that the low point earlier this year has now passed. Approvals in the third quarter, although not up as much as first expected, are still 3 per cent higher than in the second quarter.

"I would not be at all surprised if there were a continuing growth in house prices in the fourth quarter of this year. The conditions that forced prices down are dropping away and the market could move quite rapidly."