Mixed messages on the property market

Further confusing results have been reported for house price indices. Nationwide reported a modest downturn trend in prices in October, while Acadametrics and Halifax reported an increase.

Nationwide states there was a 0.7% fall in UK house prices, confirming the trend that started in the summer.

According to the lender, the average price edged down to stand at £164,381 in October. The quarterly rate of change fell to -1.5%, down from -1% in September, and the largest decline over three months since April 2009.

Acadametrics reported an increase of 0.3% in October, the fourth consecutive month its index has seen a marginal gain. It says the average house price for England and Wales is now £224,709, which is still £7,119 down since the peak in February 2008.
Halifax results show a bigger monthly increase of 1.8%, bringing the average price to £164,919.

Dr Peter Williams, housing market specialist and chairman of Acadametrics, explains that as the market is bouncing along the bottom, we should not be surprised to note a degree of variation between the different indices.

"Our index shows that, along with relatively flat prices, we continue to have a much reduced volume of transactions," Williams says. "This is indicative of a slow market, reflecting the range of negative factors which both buyers and sellers are facing in the short to medium term," he adds.

Martin Gahbauer, Nationwide's chief economist, warns that if the recent trend in house prices were to continue through November and December, the annual rate of house price inflation would drop to between 0% and -1%.

Should the Bank of England introduce further quantitative easing, Gahbauer says it could raise inflation expectations, which, in turn, could encourage investors to divert more money from cash holdings into property-related assets.

This article was originally published in Money Observer - Moneywise's sister publication - in December 2010.

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The issue is how you read macro economics in comparison to micro economic climates. In just one county there can be both increases and decreases due to the local geography, demand and climate. As many London buyers will know - one side of the street can be more expensive that others!