We are watching house prices in the United Kingdom and the United States to determine whether they have stabilized after the initial descent. This is crucial if these two countries are to avoid a double dip recession. So I am going to start reporting these figures again. Analysts such as Meredith Whitney have predicted a double dip in housing in the US.
In the UK, house prices turned up before the US, but they are also weakening first. According to Nationwide Building Society, this month there was a slight uptick in prices of 0.1% after last month’s decline of 0.8%. Nevertheless, Nationwide’s index turned negative on a three-month rolling basis for the first time since May 2009.
Commenting on the figures Martin Gahbauer, Nationwide’s Chief Economist, said:
September proved to be an uneventful month for house prices. The seasonally adjusted price index for a typical UK property was essentially unchanged in September, edging up by a marginal 0.1% from its August level. That left the annual rate of house price inflation at 3.1%, down from 3.9% in August and 6.6% in July. The three month on three month rate of change – a good indicator of the near term price trend – fell from 0.0% in August to -0.9% in September. This represents the first negative reading for the three month rate of change since May 2009 and is consistent with the clear loosening of housing market conditions observed over the summer months.
Although the three month rate of change has turned negative, at this stage it is not pointing to a significant pace of decline in property values. During the 2008 downturn in house prices, the three month rate of change dropped as low as -5.1%, well below the current level of -0.9%. Nonetheless, buyers appear to have a slightly better hand than sellers at the moment, as the market continues to absorb the recent increase in property for sale.