IS A NEW PROPERTY RECESSION ON THE HORIZON?

THE UK could be hit with a new property recession as house prices fall to the lowest levels for years.  Figures showed this will be the longest continuous fall in prices since 2009 – the peak of the financial crisis.  Prices fell 0.2 per cent in May, 0.4 per cent in April, and 0.3 per cent in March

House prices have been slowly falling since February

Prices fell 0.2 per cent in May, 0.4 per cent in April, and 0.3 per cent in March.  Nationwide Building Society, which publishes its house price index data each month, found that across the UK, the average property price was £208,711 in May.  While this means that average house prices are up 2.1 per cent year-on-year, the index shows that price growth is slowing – with price growth the previous year at 4.7 per cent.  Henry Pryor, a buying agent, told the Times: “We are in that phase of the market where people are concerned that what they pay for today may be cheaper tomorrow.  “What happens in London ripples out to the country. It might be this time next year before it hits Shropshire and Norfolk, but what is going on in central London matters.”  Robert Gardner, Nationwide’s chief economist, said that the figures provide further evidence that the housing market is “losing momentum”.  He said: “House prices recorded their third consecutive monthly fall in May – the first time this has occurred since 2009.  “The annual rate of growth slowed to 2.1 per cent, the weakest in almost four years.  “If history is any guide, the slowdown is unlikely to be linked to election-related uncertainty. Housing market trends have not traditionally been impacted around the time of general elections.”

Average house prices are still rising, although growth is slowing  Gardner added that it is too early to know whether the slowdown is “merely a blip”, a reflection of the squeeze on household budgets, or is a result of increasing affordability pressures in key areas.  He said that despite the “unusually uncertain” outlook for the economy, the subdued level of building activity and the shortage of properties on the market are likely to help hold prices up.  He believes a small increase in prices of around 2 per cent is likely over the rest of the year.