Nationwide comments
Here are some selected comments from Martin Gahbauer, Nationwide's chief economist:
"The further increase in house prices is very much consistent with improvements in a broad range of economic and financial indicators over the last few months, all of which suggest that the most intense phase of the recession and financial crisis has probably passed.
"However, given that the housing market still faces considerable headwinds in the form of high unemployment, restrictive credit conditions and an impending withdrawal of the stamp duty holiday, it would be surprising to see house prices continuing to increase at the very strong rate seen in recent months.
"One reason to remain cautious about the outlook for house prices is that turnover in the market is still well below normal levels. Lead indicators such as mortgage approvals for house purchase suggest that turnover should continue edging higher over the next few months, but at the current rate of increase it would take another 18 months for it to reach pre-downturn levels.
"The downturn in housing turnover over the last two years has prompted many home movers to let their old properties out rather than sell. The option to let has enabled many to move home even without being able to sell their old properties at the desired price.
"The surge in so-called ‘accidental landlords' has limited the supply of property in the sales market and increased the stock of homes available to let. Although the drop in yields has been offset by large declines in interest rates over the last year, one cannot expect rents and house prices to move in opposite directions indefinitely.
"Over recent months the increase in ‘accidental' landlords seems to have tapered off, which may indicate that some of this elevated rental supply is returning to the sales market, with possible negative implications for house prices. This need not be the case if the new supply is matched by new demand, but rising unemployment and tight credit conditions suggest that demand may remain sluggish in the near term."
