Date issued: 26 Feb 2009
IMPROVING AFFORDABILITY HELPS NEW AND EXISTING BUYERS
- House prices fell by 1.8% in February
- More cuts in base rate expected
- Falling rates reduce existing variable rate borrowers’ typical payments by a third
- New buyers see significant improvement in affordability
| Headlines |
February 2009 |
January 2009 |
| Monthly index * Q1 '93 = 100 |
298.3 |
303.8 |
| Monthly change* |
-1.8% |
-1.3% |
| Annual change |
-17.6% |
-16.6% |
| Average price |
£147,746 |
£150,501 |
* seasonally adjusted
Commenting on the figures Fionnuala Early, Nationwide's Chief Economist, said:
“The price of a typical house fell by 1.8% in February, bringing the annual rate of change to -17.6% and the price of a typical house down to £147,746, from £179,358 this time last year. Sharp cuts in interest rates have helped affordability, but have not yet affected housing market confidence sufficiently to boost the levels of new transaction activity or slow the pace of house price falls. Early signs of increased interest in housing, as reported by the pick up in new buyer enquiries, have yet to filter into sales, but do suggest that falling prices and interest rates are raising curiosity now, which could flow through quickly once confidence returns.
“The February Inflation Report also implies that the MPC has not finished cutting interest rates yet. First, the Bank’s economic forecast factoring in a 25bp cut, left inflation significantly below its target two years ahead and GDP contracting sharply. Second, Mervyn King clearly stated that "further easing may well be required" when asked how much further rates could fall – a sentiment subsequently echoed by other MPC members. Further cuts in rates will be welcome in the housing market, but the economic conditions that require them will mean that there is unlikely to be a swift turnaround in the housing market in 2009.”
For further information please see this month's full report (PDF 51KB).
