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Demand for housing ‘extremely subdued’

Demand for housing ‘extremely subdued’

Category: Mortgages

Updated: 29/11/2011
First Published: 29/11/2011

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Demand for housing in the UK remains 'extremely subdued' and prices are expected to continue to drift over the next year.

Figures from Nationwide show that house prices increased by 0.4% in November, as was also the case in October.

Over the last year, the average house price has increased by 1.6%, taking the value of a typical home to £165,798.

But any hopes of a recovery in the housing market are misplaced, according to Robert Gardner, chief economist at the building society.

"House prices have remained surprisingly resilient in recent months, despite the deterioration in the economic outlook.

"But, with the UK economic recovery expected to remain sluggish well into 2012, house price growth is likely to remain soft, with prices moving sideways or drifting modestly lower over the next 12 months."

Demand for properties shows no sign of breaking out of its current low level.

Research from Hometrack recently revealed that the number of house sales is set to fall to a 40-year low this year, with the slump expected to carry over into 2012.

The problems in the housing market have been compounded by a number of the factors.

For example, the UK economy lost almost 200,000 jobs in the three months to September – similar to the pace of job losses seen during the depths of the 2008 recession.

At the same time, wage growth slowed to 1.7% - less than half the pace of inflation over the same period.

Similarly, consumer confidence, which also influences the willingness to make a major purchase, remains extremely depressed.

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