Housing market cooling off

26.08.2005 This year the UK housing market has come off the boil. Annual house price inflation has fallen steadily from a peak of over 20 % in early 2004 to 6 % in May this year, according to surveys carried out by the Halifax and Nationwide building society.

The surveys have shown steady decrease in house price inflation since August 2004. Nationwide economist Fionnula Earley commented ‘This continues the trend witnessed at the start of the year and is consistent with Nationwide’s view that the market is cooling gradually’
UK House Prices rose 0.3%
In June the Halifax reported that the housing market had been largely flat in 2005 and prices had been falling by just over 0.1 % over the five months leading to June. Whilst Nationwide building society reported prices to have risen by 0.5 % on a three-month-basis to May, with an average of a 0.2 % uplift in each of the past three months.
This trend comes as a blow to some of the forecasters last year. Some of the harshest predicted a market crash with housing prices to fall in 2005 by as much as seven %. Nationwide and Halifax’ surveys have not translated into such a precipitous drop.
According to Ed Stansfield of Capital Economics ‘That 7 % figure is beginning to look far to gloomy, with a 2-3 % fall more likely’
The last housing crash took place in the early 1990s and economists have commented that current conditions have little in common with those then. Employment is at its best since the 1970s and the economy remains healthy.