UK housing market still lacklustre

The UK housing market is still subdued, according to the latest monthly survey from the Nationwide building society.

It says prices rose by just 0.3 percent in May, which still left them 1.2 percent lower than a year ago at an average of £167,208. In the past six months prices have drifted up, by 0.6 percent.

But the lender’s chief economist, Robert Gardner, said prices and sales reflected the lacklustre state of the economy.

“The UK economy returned to growth in the first three months of 2011, albeit at a modest pace,” he said.

“Nevertheless, the modest improvement in economic conditions has so far been insufficient to pull the housing market out of its torpor, as the headwinds facing households remain strong.”

Earlier this week, figures from HM Revenue & Customs (HMRC) showed that sales have been stagnating. Only 66,000 homes were sold in April, which was 1,000 fewer than in March and also 6,000 fewer than in April last year.

The latest data from the Nationwide is similar to that from other market sources.

Recent figures from the Council of Mortgage Lenders (CML) and the Bank of England on, respectively, total mortgage lending and mortgage approvals, showed no improvement from the current historically low levels of activity. One factor weighing on the market has been the continued rationing of mortgage funds by lenders.

This has been allied to an increasing wariness by would-be borrowers because of the subdued state of the economy and fears of higher unemployment.