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Nationwide: little change to UK house prices

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The price of the average UK home dropped by 0.1% in December, giving an annual decline of 1% over the year, according to Nationwide Building Society.

That fall reversed the 1% increase in prices recorded in 2011, leaving the typical UK property worth £162,262.

House price movements varied regionally, with vales in England dropping by just 0.4% in 2012, while Wales saw a fall of 2.7%, Scotland a loss of 3.3% and Northern Ireland witnessed the greatest annual decline in average prices, losing 8.2%. Average prices in Northern Ireland now stand 50% lower than their 2007 peak.

Within England the North/South divide continued to grow throughout the year, with the price of a typical property in the South now worth £95,000 more than the North.

London again recorded the greatest house price growth, up 0.7% in 2012.

Robert Gardner, Nationwide’s Chief Economist, said:

“UK house prices were little changed in December, declining by just 0.1% over the month, though this was sufficient to keep the annual rate of price growth in negative territory for the tenth month in succession. Over 2012 as a whole, the price of a typical UK home remained fairly stable, declining by 1%, reversing the 1% price gain recorded in 2011.

“Given that the UK economy was in recession for much of 2012 a 1% decline in house prices may be seen as a relatively resilient performance. However, the fact that prices declined even though employment rose strongly, suggests that conditions remain fragile, especially since other signs of housing market activity, such as the number of mortgage approvals, remained subdued, well below their long run averages.

“The outlook remains uncertain. Continued low interest rates and policy measures such as the Funding for Lending Scheme should provide some support. But, with the economic recovery expected to remain fairly weak, the housing market is likely to be characterised by low levels of activity again in 2013, with prices remaining flat or modestly lower over the course of the year.”

Jonathan Hopper, managing director of the property search consultants, Garrington, added:

“With the exception of prime properties, the North/South divide is as pronounced as ever. In 2013, there’s every reason to believe prices of mainstream properties will continue to fall in the North and rise in the South, where the economy is much more stable.

“There will be pockets of resistance around the UK and the capital’s unique microclimate should once again see it outperform.

“Overall, though, expect to see another flat market during 2013 with regional price volatility from one month to the next due to low transaction levels.

“While the employment market was surprisingly robust during 2012, wage growth was low and living costs high. This dampened consumer confidence and the demand for property, which in turn kept prices low.

“Prices might have been lower were it not for the fact that interest rates are so low, which is preventing forced sales and thus restricting supply.

“People buy property when it feels right instinctively. For many people, that’s just not the case at present.

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