Housing market is going nowhere

house at crossroads

UK house prices have increased by 1.2% in October, according to the latest Halifax house price index but the picture is bleaker longer term.

House prices have gone down by 0.3% in the last quarter and are down by 1.8% year-on-year.

Nicholas Ayre, director of estate agent Home Fusion, says the monthly rise should be taken with a pinch of salt: "Forget the monthly figure showing a 1.2% rise, which is merely a reflection of the lack of transactions.

"The figure that more accurately reflects the market is the quarterly one, showing a fall of 0.3%. The property market, like the economy, is like an engine idling."

Little change

Over the past year, there have been four monthly price rises, four drops and a month with no change, indicating there has been little change in prices during 2011 overall.

Halifax housing economist Martin Ellis says: "The housing market has proved highly resilient in recent months, despite the weak economic recovery and the deterioration in the outlook for both the UK and global economies.

"Despite these developments, house sales and the supply of properties for sale have remained very stable since late 2010."

Ellis expects activity in the housing market to remain subdued for the next few months, thanks to "exceptionally" low interest rates and a "very difficult economic climate". 

Halifax's figures come after Nationwide reported last week that average house prices have gone up by 0.8% over the past year, according to its latest index.

Despite the slight upturn, Nationwide's chief economist maintained that the housing market outlook "remains uncertain".