Nationwide Optimistic about House Prices
May 29th, 2008 by 
Guy
Nationwide Building Society figures showed that house prices fell again this month and are down around £8,000 compared with the same time last year.
Nationwide’s house price index for May showed that prices fell by 2.5%, the largest monthly reduction since the index began in 1995.The average house price in the UK is now £173,583 compared with £178,555 in April.
Fionnuala Earley, chief economist at Nationwide, says: “Problems in the credit markets have been the trigger for changing fortunes in the housing market. While it is never wise to place too much weight on one data point, the apparent speed of the adjustment may lead the Monetary Policy Committee to look more closely at the balance of inflation risks in the medium term.”
Nationwide said there’s scope to be optimistic because prices are 5% higher than they were two years ago.
They say borrowers are also better placed to withstand a housing market downturn than in previous years. Most did not buy at the height of the market, they are putting down larger deposits and are choosing capital rather than interest-only mortgages.
Earley adds: “Tighter credit conditions are making it more difficult for borrowers to obtain loans at higher LTVs but more stringent underwriting criteria should lead to fewer overstretched borrowers and a more stable and sustainable market.”
One Response
Leave a Comment
May 29th, 2008 at 2:34 pm
[…] Original post here […]