A slowdown in the supply of residential homes is helping support UK house prices. Figures from Nationwide show values rose by 0.3 per cent in May compared with the previous month, although prices are still down by 0.7 per cent compared with the same time last year. A typical property now costs GBP166,022 - this figure stood at GBP164,134 in April.
"Demand for homes remains subdued on the back of weak labour market conditions, but the lack of homes coming on to the market is providing support for prices," explained Nationwide chief economist Robert Gardner, adding: "This is in part a reflection of the low rate of building in recent years, which has failed to keep pace with household formation." Indeed, statistics released by Communities and Local Government last month revealed an 11 per cent decline in house building starts over the first three months of 2012, as well as a fall of six per cent in the year to March.
The rental market is also seeing a similar trend, with demand from tenants outpacing the number of lettings available, according to Nationwide. Figures from Rightmove show 61 per cent of those renting homes believe they will be paying more to do so in a year from now. Rental prices are highest in London and the south-east, and lowest in the north-east and Scotland. Rightmove says it has seen a three per cent drop in the number of lettings being advertised on its website, compared with a 43 per cent increase in searches for places to rent.
The Council of Mortgage Lenders has suggested the outlook for the UK property market is an uncertain one, particularly with the eurozone crisis dominating the headlines. Further negative developments in this area could lead to a much sharper decline than is currently being seen, it said last month.
- Tuesday 05 June 2012