House price growth 'steady'
Prices rose by 1.7% during the month leaving the average price of a home at £117,905. The annual growth rate increased slightly to 26.5% from 25.3% in December, although the Nationwide said this was due to smaller price rises a year ago.
In line with expert opinion, the society said it expects price growth to begin to ease later this year. “With the current trend in growth very stable and strong we would expect the annual inflation rate to remain around 25% for the next couple of months,” said Nationwide's group economist Alex Bannister. “However, in the six months between April and September last year house prices rose by a cumulative 15.5%, or an annualised rate of 33%. We do not expect to see this strength repeated this year and the annual rate of inflation should decline significantly over this period.”
Yet Nationwide noted that if house prices actually began to fall, homeowners were in a much better position to cope than in the past. The society said there were three key risks to the housing market – a sharp rise in interest rates, a significant increase in unemployment or a large fall in consumer confidence. While it noted that a war in Iraq could hit confidence, it said sentiment should remain “robust” while unemployment continuing to fall and the chance of a big rate rise was small.