"Nationwide house price data provides further evidence that the residential property market appears to have found a floor, at least for the time being. Prices on the Nationwide index have now risen in three of the last four months and although the year-on year rate of change is still negative to the tune of 9.3%, this is the least worst reading since July 2008. Significantly, the Nationwide press release draws attention to the collapse in inventory on estate agents books, signalled by RICS data, as providing a key support for prices at the present time. Demand, as measured by mortgage activity, is continuing to edge upwards but Bank of England data released yesterday demonstrated in the clearest possible way that a lack of finance is a key obstacle to a more meaningful increase in transaction levels.
"The other interesting element of the Nationwide figures is the regional breakdown. London and the South East were amongst the firmer areas in the second quarter, a result that is broadly consistent with the regions that have seen the strongest gains in buyer enquiries according to the monthly RICS survey. The RICS report also notes an increase in interest in Wales, something also noted in the Nationwide survey.
"Tempting as it is to conclude that the bottom has now been seen in the pricing cycle, there are still considerable headwinds for the housing market to overcome, most notably in the form of further significant job losses during the balance of this year. In addition, rising market interest rates are likely to exert some upward pressure on mortgage rates even before any official move is made to begin taking back some of the monetary stimulus. That said, without any rise in new instructions the shortage of property could remain a key determinant of the market's fortunes."
