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House Prices Lose Ground In 2012 - Report

(c) Sky News 2013

House prices edged lower in December, prolonging stagnation in the market, according to new data.

The Nationwide said house prices fell 0.1% in the month, compared to no change in November (Xetra: A0Z24E - news) , and slightly weaker than forecast by economists.

Prices were also 1% lower over the year, reversing the 1% rise recorded in December 2011.

"Given that the UK economy was in recession for much of 2012 a 1% decline in house prices may be seen as a relatively resilient performance," Nationwide chief economist Robert Gardner said.

"However, the fact that prices declined even though employment rose strongly suggests that conditions remain fragile."

Over the year Cambridge (SES: E1:J91U.SI - news) saw a 6% rise, Coventry 3% and London 0.7% however Bradford and Manchester both dropped 9%.

Nationwide said below-inflation wage growth, the high cost of housing relative to earnings and an uncertain economic outlook held back demand.

Meanwhile, supply of homes on sale also remained tight, "providing little impetus for prices to move strongly in either direction".

Mr Gardner said prices were likely to remain flat or modestly lower in 2013 as support from low interest rates and the Bank of England's Funding for Lending Scheme would be counterbalanced by a weak economy.

Nationwide said the price of an average home in Britain was £162,262 in December, almost 13% below the peak of £186,044 reached in October 2007.

However, there were some 216,000 first-time buyers last year, up 12% from 2011.

The annual Halifax first-time buyer review said it was the highest annual figure since 2007, but still only around half of the peak reached in 2006 of 402,800.

Raising a suitable deposit amid rising rental costs remain key concerns for many would-be first-time buyers.

The latest housing data comes as a new push is made for breaking up of banks into separate retail and investment entities.

The Institute for Public Policy Research (IPPR) said the Government had been "too timid" in forcing change on the banking sector.

The IPPR said greater conditions should be placed on mortgages to reduce high-risk lending by forcing more conservative loan-to-value or loan-to-income ratios.

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