Nationwide unsure over property recovery

18/06/2009

Reports that the housing market might be on the road to recovery might be misleading, a Nationwide expert has said.

Martin Gahbauer, chief economist at the building society, said that at the moment a "real demand-led recovery" does not exist in UK housing.

This is despite several indicators, including Nationwide's own house price index, suggesting that the property slump might already be over.

The firm said that the cost of the typical home had risen by 1.2 per cent in May - but that the price was still over 11 per cent what it was in May 2008.

Rising house prices are good news for homeowners struggling with the costs of their mortgage and facing repossession - as they generally lead to an improvement in credit conditions and in the economy as a whole.

This makes it easier to get an affordable mortgage and limits job losses.

Martin Gahbauer, chief economist at Nationwide, said: "In essence, prices have stabilised for the moment but it is not a real demand-led recovery, it is more likely a frozen market at the moment more than anything else.

"For a real recovery to take place you need a greater amount of first-time buyers coming into the market because that is really what will provide the necessary injection of equity to get things moving across the entire housing chain."

Tags; Debt Management and Banking, Credit Card Lifestyle, Young Family Finances,

• Share
• 
• 
• Store
• 
• Follow
•