House prices fall unexpectedly in January - Nationwide
LONDON (Reuters) - House prices unexpectedly fell for the second month in a row in January, due to the prospect of greater unemployment and buyers' problems finding large enough mortgage deposits, data from lender Nationwide showed on Wednesday.
Nationwide said that house prices dropped by a seasonally adjusted 0.2 percent last month after a similar decline in December, and are just 0.6 percent up on a year earlier.
Economists polled by Reuters had expected prices to remain flat on the month, giving an annual rise of 1.4 percent.
"The weakness in buyer demand is partly a reaction to the uncertain outlook for the economy, especially the labour market. But affordability is also part of the explanation - in particular, finding a sufficient deposit," said Nationwide's chief economist, Robert Gardner.
The housing market, formerly a major driver of consumer spending, has been extremely sluggish since the start of the financial crisis, a point reinforced by Bank of England mortgage data on Tuesday.
Nationwide said that the average first-time buyer now opted to put down a 20 percent deposit, compared to 10 percent in early 2008. Mortgages with lower deposit requirements are available, but tend to carry punitive interest rates.
However, for those home-buyers able to find a 20 percent deposit, low interest rates mean that servicing a mortgage is now cheaper than four years ago and close to its long-run average, with initial payments now costing 31 percent of take-home pay, down from 46 percent in 2008.
(Reporting by David Milliken; Editing by Hugh Lawson)
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