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Unpredictability reigns in the housing market

Unpredictability reigns in the housing market

Category: Mortgages

Updated: 04/05/2011
First Published: 04/05/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The housing market has proved an unpredictable beast in recent months, and April was no exception as prices took a dip.

The trend is expected to continue over the rest of the year, with prices predicted to level out or drift slightly lower throughout 2011.

The average price of a home in the UK fell by 0.2% last month, meaning that since November 2010 prices have increased in three months and fallen in three months, according to Nationwide.

A pattern of modest monthly increases and decreases is fairly typical of a static market, as it has been since last summer.

The fall in April meant the average price of a home in the UK finished the month at £165,609, a fall of 1.3% from a year ago, when a buyer could have expected an average price tag of just over £167,800.

Over the last three months, prices have risen by 0.6% compared with the previous three month period – a measure that is considered to be more reliable in showing the underlying trend in the property market.

"There is little evidence to suggest that price declines will accelerate in the months ahead," said Robert Gardner, chief economist at Nationwide.

"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."

Those looking for a full-blown recovery shouldn't hold their breath, however.

Because, while low interest rates and a gradual improvement in the job market should help support demand for housing, a strong rebound remains unlikely.

"In our view, the most likely outcome is that house prices will continue to move sideways or drift modestly throughout 2011," Mr Gardner added.

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