Britain’s housing market is approaching a 'turning point' as the boost from previous rate cuts wears off and high prices begin to bite, Britain’s largest building society Nationwide warns.
The winter mini-boom, which has seen five successive months of price rises, will fade before the summer, it forecasts.
"We're at a turning point," said Fionnula Earley, Nationwide's chief economist. "I think we are at the stage where affordability constraints are biting and there are other things on the horizon that will stop people splashing out: higher utility bills, rising unemployment."
Fionnula said the move to raise the stamp duty threshold by £5,000 to £125,000 contained in this year's budget proposals is no consolation.
Nationwide has forecast house price growth of 0 to 3 per cent for 2006. While the growth has been 3.7 per cent in February, this average is an indication of a clear slowdown in the latter part of the year.
Halifax chief economist Martin Ellis agreed that the pick-up was unlikely to accelerate into a long-term recovery.
"People haven't got the spare cash to pump loads of money into the housing market," Ellis said.
But after a difficult 2005, estate agents are optimistic. "Valuations are high, many new properties coming on to the market are selling like hot cakes," said Christopher Hall, president of the National Association of Estate Agents, who predicted annual price growth of 5 per cent.
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Nationwide warns that house prices have hit turning point
Tue, 28 Mar 2006
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