20 things

20 things you should know about

3 March 2007

1 The Nationwide House Price Report for February revealed that house prices increased by 0.7 per cent during

the month.

2 This compared to the 0.3 per cent increase experienced in January.

3 Nationwide indicated that the average house price reached £174,706 in February.

4 This was over £16,000 more than the February 2006 findings.

5 This equated to a rise of £40 per day, the data suggested.

6 The annual rate of house price growth reached 10.2 per cent in February, Nationwide reported.

7 This was a 0.9 per cent increase from the January findings..

8 The seasonally adjusted monthly index for February recorded a fugure of 352.3.

9 This was up from the January findings of 350.2.

10 Fionnuala Earley, chief economist at Nationwide, said: “The Bank spared homeowners a second consecutive rate rise in February, but its latest forecasts suggest that one more rise could still be on the cards. While the three recent rate rises now seem to be starting to take their toll on the market, not all indicators are cooling just yet. Buyer interest and mortgage demand are waning, but the supply of properties coming onto the market remains low. This lack of supply will mean that house price inflation will remain firm for a while longer, before gradually easing.”

11 Nationwide reported that, at the start of the last rate cycle, when the Bank of England implemented the first of five interest rate rises in November 2003, property sales by estate agents took an immediate knock and fell quite sharply for the next 15 months.

12 Earley added: “For now, supply issues are keeping an upward pressure on prices as property sales have continued to rise, while the number of properties placed on the market has been falling. However, demand indicators suggest that the tightness in the market will soon begin to ease.

13 “Mortgage approvals for house purchases recorded their largest monthly fall since the early 1990s and were down from 128,000 in November to 113,000 in December. Estate agents have recorded two successive months of falling buyer enquiries after 18 months of gains.”

14 Nationwide cited the importance of a healthy buy-to-let sector.

15 The number of buy-to-let mortgages was 20 per cent higher than at the end of 2005.

16 The lender added its expectations that the buy-to-let market was not immune from higher rates and expected this to dampen new demand by putting further pressure on rental yields.

17 However, Nationwide indicated that 57 per cent of investors still claim that they expect to acquire further properties over the next 12 months.

18 Indices and average prices are produced using Nationwide’s updated mix adjusted House Price Methodology which was introduced with effect from the first quarter of 1995. Price indices are seasonally adjusted using the US Bureau of the Census X12 method.

19 Currently, the calculations are based on a monthly data starting from January 1991. Figures are recalculated each month, which may result in revisions to historical data.

20 The Index is prepared from information which is collated with care, but no representation is made as to its accuracy or completeness.