House price growth slumps to 12 year low
The growth in house prices has slumped to a 12 year low According to new figures released today from Nationwide.co.uk
Even though we’re seeing a slump in house price growth it’s not all bad news, Nationwide’s Chief Economist, Fionnuala Earley explains;
“House prices fell for the fifth consecutive month in March. The price of a typical house fell by 0.6% during the month, bringing the annual rate of house price growth down to 1.1% - its lowest rate since March 1996. A clear change in sentiment since the late summer has led to the sharp slowing in house price growth, even in the less volatile 3-month on 3-month series. Prices on this measure are now 1.5% lower than three months ago. The price of a typical house in the UK is now £179,110, only £2,027 more than this time last year. However, prices are still 11% higher than two years ago and 47% higher than five years ago - the equivalent of a price rise of more than £30 per day for the last five years.”
Fionnuala Earley continues to comment on the possibility of Base Rate cuts in April; “The minutes of the March MPC meeting were relatively dovish and while recognising that the MPC still had a difficult path to tread, were perhaps more accepting of room for a cut in rates sooner rather than later. The minutes acknowledge that a back-to-back cut in rates in March may have given an overly strong signal that growth, rather than inflation, had become the priority. This barrier has now been removed and, since the last meeting, the collapse of Bear Stearns and the fallout from false rumours of problems in a major UK bank may have helped to shift the focus of the MPC to the need to loosen conditions in the financial markets. We think these latest developments, along with the continued weakening in the housing market, will mean that the MPC will bring forward its rate cut to April.”
So what does this mean for house prices? The bottom line is that, yes, house prices will fall this year but if you look at the fall in context with the last few years and if house prices continue to fall as expected then they will still be higher than they were 2 years ago. Fionnuala Earley says that “A moderate fall in prices at this stage should not be unwelcome and should help to ensure greater stability in the market going forward.”
If you’re one of the 1.5 million people looking to remortgage remortgage this year make sure you compare mortgages to ensure you get the best deal.
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