Property market slows, but may roll on yet
February 9, 2006
Data from the Land Registry has shown that house prices over 2005 grew at their lowest level since records began in 1995.
Meanwhile, the Halifax Building Society has reported a 0.5% fall in house prices for January.
However, the Nationwide claims that “seasonally adjusted” figures have the housing market as rising 1.4% over January.
The apparent confusion in how the UK property market is performing can be attributed to different sources have different data to determine their figures.
If housing inflation is effectively flat across the UK, then different data sets will likely show slight rises and falls, according to the different bias of data used.
However, the national figures cover up important variations across the UK, with Scotland and Northern Ireland still experiencing strong growth, while the South East is reportedly stagnant.
While lenders are trying to appear optimistic about the coming year, the inevitable fact remains that housing inflation has outstripped wage inflation. This means that affordability is a real problem for many ordinary domestic buyers.
Property being purchased for investment purposes is likely to remain significant for a while yet, and help roll the housing market along, even if at a slower rate. The problem here is that investors may be trying to keep expanding a bubble of their own making, on the basis of future expectations.