House prices fall 0.2% in April
The property market continued on its erratic journey this spring, with house prices down 0.2% in April according to data from Nationwide.
The fall comes after a modest increase of 0.5% in March. On a year-on-year basis, the average house price is now 1.3% lower at £165,609.
The building society reports that since November last year, house prices have risen in three months and fallen in as many.
Robert Gardner, chief economist with the group, says it is not "unusual" to see these jumps as the market is still fairly static.
"There is little evidence to suggest that price declines will accelerate in the months ahead. While the UK economy only managed a modest bounce back at the start of the year, after the weather-induced contraction in late 2010, the economic recovery is expected to gather momentum," he adds.
"The most likely outcome is that house prices will continue to move sideways or drift modestly lower through 2011."
The fall in house prices comes on the same day as it is revealed mortgage approvals are up.
Lenders granted 47,557 mortgages in March, up from 46,708 in February, according to official data from the Bank of England.
Commenting on the property market, Samuel Tombs, UK economist at Capital Economics, says March's borrowing figures shows activity in the market remains static.
"The rise [in mortgage approvals] only took approvals back to the level seen in November. And at least part of that rise probably reflects some buyers rushing to beat the new 5% rate of stamp duty.
"What's more, even though activity has picked up a bit, house prices are still broadly stagnant," he comments.
Nicholas Ayre, a director of UK buying agents Home Fusion, comments that the market is mirroring the up-and-down nature of the economy at the moment.
"Positive data followed by negative data, confidence up, confidence down. Given the state of demand, it's certainly not surprising that prices have fallen again. In a climate of high unemployment, high living costs and, sooner rather than later, higher interest rates, the demand for property is understandably low."
He concludes: "Overall, from a UK perspective, the property market is still very much on the back foot."
A hugely unpopular tax paid on property and share purchases. Stamp duty on property is levied at 1% for purchases over £125,000 (£250,000 for first-time buyers) which then moves up at a tiered rate. For property between £125k and £250k you pay 1%, then 3% from £250k up to £500k and then 4% from £500k to £1m and then 5% for properties over £1m. But unlike income tax, which is “tiered” and different rates kick in at different levels, stamp duty is a “slab” tax where you pay the rate on the whole purchase price of the property. On shares, stamp duty is charged at a flat rate of 0.5% on all share purchases. Figures correct as of May 2011.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.