House prices to fall in 2006, then level out

House prices to fall in 2006, then level out

Friday, November 18, 2005

Nationwide Building Society forecasts that house prices could fall in the first part of next year but return later, giving flat growth over the year.

The prediction came as Nationwide reported a rise in pre-tax profits to £255m for the six months to 30 September, from £224m last year.

The news comes as the lender and others report the housing market picking up again after an 18-month long downturn. Earlier this month, Nationwide reported that house prices increased by 1.3% in October, leaving the average house price at £157,107.

Philip Williamson, Nationwide chief executive, said house prices could fall in the first part of 2006 and for the entire year the building society was predicting zero growth. For 2005 it predicted zero to 2% growth.

Nationwide's share of the net mortgage market fell to 8.3% in the 6 months to the end of September from 13.7% last year but Mr Williamson said he expected this share to rise to around 9% by the end of the year and stay there for the next year or so.

"We have adopted a purposively cautious approach to mortgage lending... but we expect our profitability to continue to do well," said Mr Williamson.

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