The Nationwide said a further pick up in prices occurred this month with the average house now costing £149,020.
But an ever-dwindling number of first-time buyers, along with rising debt burdens means there is a growing risk of a long period of indifferent housing market activity with smaller price gains, the mortgage lender warned.
|
|
May |
April |
|
Monthly Index (seasonally adjusted) Q1 1993=100 |
296.6 |
291.0 |
|
Monthly change (seasonally adjusted) |
1.9% |
2.1% |
|
Annual change |
19.5% |
18.9% |
|
Average price |
£149,020 |
£145,918 |
Commenting on the figures Alex Bannister, Nationwide's Group Economist said: "The rapid rise in house prices was sustained into May with the price of the average house increasing by 1.9% during the month.”
“As a result, prices are now £24,000, or 19.5%, higher than in May last year. In the first five months of this year prices have risen by more than 9%, compared to a rise of 5.8% over the same period last year.”
"Our house price forecast for the 12 months to December 2004, which remains at 15%, implies an average monthly rise of just 0.7% for the remainder of the year. We expect the combination of muted post tax earnings growth, further interest rate rises (we expect rates to rise to 4.75% by year end) and a downgrading of homeowners' price growth expectations to slow the market over the second half of the year.”
“However, given the current momentum in the market there is now some upside risk to our forecast. With many potential first-time buyers currently unable to enter the market and also high and persisting real debt burdens constraining existing homeowners' ability to trade up in the future, there is a growing potential for a drawn out period of low activity and low price growth.”
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