House prices going nowhere in 2012

House which way arrows

House prices are set to remain flat in the UK this year, according to the latest figures from the Halifax.

The lender said prices were broadly the same as a year ago, falling by 0.1% in May compared with a year earlier. But it added that prices had picked up between April and May, rising by 0.5%, to an average of £160,941.

"Broad stability is a euphemism for rank inactivity. After the spike in sales prior to the ending of the stamp duty holiday, transactions levels are once again starting to gather dust," commented Ashley Alexander, managing director of estate agent review website MeetMyAgent.

"The price rebound from April to May reflects a lack of transactions, not a sudden rejuvenation of the market. Erratic monthly price movements generally mean a market is going nowhere."

Factors for no growth

Alexander believes there are simply too many factors preventing a purchase. He points to a lack of stock generally, intransigent sellers, tougher lending criteria and consumer caution are keeping transaction levels low.

"As we move into the summer, expect sales to drop off further as people spend more time staring into a 40-inch Panasonic than an estate agent's window," he warned.

Martin Ellis, housing economist for the Halifax admitted: "We expect this situation to continue with prices likely to still be around today's levels at the end of 2012 as the ongoing tough economic environment constrains housing demand."

A recent survey by rival Nationwide suggested that prices were "fairly stable" as they ticked up 0.3% during May, although this was 0.7% lower than the same period in 2011.

Meanwhile, the survey from the Land Registry, covering just England and Wales, revealed a year-on-year 1% fall in prices during April.

This article was written for our sister website Interactive Investor