LONDON (Reuters) - British house prices edged lower in December, prolonging stagnation in the market, and a pick-up in the new year is unlikely, data from mortgage lender Nationwide showed on Thursday.
Nationwide said house prices fell 0.1 percent on the month, compared to no change in November, and slightly weaker than forecast by economists. Prices were 1 percent lower over the year, reversing the 1 percent rise recorded in December 2011.
“Given that the UK economy was in recession for much of 2012 a 1 percent decline in house prices may be seen as a relatively resilient performance,” said Nationwide’s chief economist, Robert Gardner.
“However, the fact that prices declined even though employment rose strongly suggests that conditions remain fragile,” he added
Nationwide said below-inflation wage growth, the high cost of housing relative to earnings and an uncertain economic outlook held back demand, while supply of homes on sale also remained tight, “providing little impetus for prices to move strongly in either direction”.
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 pounds in December, almost 13 percent below the peak of 186,044 pounds reached in October 2007.
Reporting by Olesya Dmitracova; editing by Ron Askew