Mixed Messages on UK Housing

On Friday, the British press was abuzz with news from Nationwide, the third largest mortgage lender, on the rise in house prices for two consecutive month-on-month cycles. However, new research from two other monitoring services draw separate conclusions. “The price of a typical house rose by 1.2% in May, providing further evidence of some improvement in housing market conditions over the last few months,” says Martin Gahbauer, Nationwide’s Chief Economist. “The 3 month on 3 month rate of change – a smoother indicator of short-term price trends – rose from -3.0% in April to -0.5% in May and now stands at its highest level since January 2008.” Data from automated valuations and risk analytics service provider Hometrack shows “British house prices were unchanged in May, ending 20 consecutive months of declines as sales volumes and buyer interest picked up amid a dwindling supply of property for sale to over 90% of UK Mortgage Lenders,” according to this report MarketWatch. Richard Donnell, the head of research at Hometrack, released research in April that seems to support the Nationwide claim. In it he states: “a pick up in the number of sales agreed over the last few months has brought with it talk of the green shoots of recovery in the housing market.” “The increase in sales is off an almost non existent base and overall volumes remain well down on what one would expect in a normal market. The current run rate over the last 3 months equates to an annual average of just 476,000 sales, compared to a normal market of 1-1.5m sales a year,” he adds. The government body, Her Majesty’s Land Registry, which tracks purchases in England and Wales shows that despite the more positive month-on-month performance, annual house prices in England and Wales fell by 16.2% in April. Data from Scotland and Northern Ireland is not included in this, however, with the former doing much better economically than the latter. But, if there is one similarity in all this, spokespeople are clear that no distinct trend is emerging. “Although the short-term trend in house prices has clearly improved from where it was at the beginning of the year, it is still too early to say that the market is turning definitively,” Gahbauer says. Write to Jacob Gaffney.