Business

UK house prices treading water, says Nationwide

Estate agency
Image caption Buyers and sellers are still thin on the ground

House prices continued to "tread water" in September - rising by 0.1% compared with the previous month, the Nationwide said.

This left the average price of a home 0.3% lower than a year earlier, at £166,256, the building society said.

Prices for the three months to September compared with the previous quarter were unchanged.

Market turmoil as a result of the eurozone debt crisis had hit confidence among buyers, Nationwide said.

"Sentiment towards major purchases is depressed, as a result of weak labour market conditions and ongoing pressure on household budgets from above-target inflation," said Robert Gardner, Nationwide's chief economist.

The figures are based on Nationwide's lending data at post-survey approvals stage.

'Sluggish demand'

He predicted that property prices would remain fairly stable over the rest of 2011, although the outlook for the global economy had "darkened".

The struggle for people to find new jobs has resulted in "sluggish demand" from potential buyers.

That, together with a gradual rise in the number of properties on the market, had led to the current market conditions.

Some of these issues are most acute in the north-east of England.

Data from the Land Registry on Wednesday showed that prices in the region had fallen by 7.8% in the year to August.

In Hartlepool, prices had dropped by 15.7% over the same period, leaving the average home worth £82,561.

David Sharpe, a sales negotiator at Dowen estate agents in the port town, said that times were difficult for sellers, especially if they were unwilling to drop their asking prices.

"We are telling people to be realistic. If the price is right then it will sell," he said.

Negative equity

Many of the properties coming onto the market in Hartlepool were the result of repossessions, he said. These included repossessed properties from landlords who had overstretched themselves.

Image caption Hartlepool's sea defences are being rebuilt, but the housing market remains weak

This meant there were some two-bedroom homes in need of some work that were on the market for £20,000.

However, at the other end of the market, Dowen had just sold an eight-bedroom period property at auction for £345,000.

Many properties were selling if prices were lowered, Mr Sharpe said, including one "extreme case" which recently sold at auction for £30,000 when it had originally been on the market for £80,000.

Dropping prices was not necessarily an option for some sellers though.

"Those who bought at the peak of the market may well have borrowed more than the property is now worth," he said.

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