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NAEA: UK market 'stabilising'

The NAEA has a taken a surprisingly positive stance on the state of the UK housing market.

According to Chris Brown, President of the National Association of Estate Agents (NAEA), the UK market ‘appears to be stabilising' which should ‘help begin to restore confidence in the market place'.

Mr Brown was commenting on the latest Nationwide House Price Index House, which showed that prices in the UK have fallen by 6.3% in the past 12 months - the biggest annual drop in 16 years.

Nothing to be positive about, surely?! 

Well, Mr Brown's confidence probably stems from the fact that although prices have fallen dramatically, they are still 4% higher than 2 years ago.

Indeed, according to the index, prices dropped by 0.9% in June - less than half the figure recorded in May.

Dramatic decline

Mr Brown explained: "It is encouraging to see that the slowdown in house prices that Nationwide has reported for June has fallen to 0.9%, which is a dramatic decline from the figures reported by the company last month.

"Indeed, we know that the market in some regions of the UK has been subdued as consumers' confidence has taken a knock with the continuing external pressures. 

However, the market appears to be stabilising which should help begin to restore confidence. 

"We have called for measures such as a stamp duty holiday for first time buyers and temporary tax relief on the mortgage interest of people's primary residence. 

"We really want to see action from the government to ease pressure and give consumers hope for the future."

Strong retail sales

Fionnuala Earley, Chief Economist at nationwide noted that house price falls makes a rise in interest rates to curb inflation - currently at 3.3% - less likely.

Ms Earley said: "The adverse inflation developments along with the surprisingly strong retail sales data clearly make it less likely that the Bank will be able to rapidly reduce interest rates. But we still think the next move in rates will be down.

"Our central expectation is that wage growth will remain stable, consumer spending will come under increasing pressure and the economy will continue to slow. If this proves correct, the (Bank) should feel able to adjust rates before the end of the year."