House prices up but property market to remain ‘sluggish’ - Citywire

House prices up but property market to remain ‘sluggish’ - Citywire

House prices rose 0.5% in March, but the unexpected increase is unlikely to mark the beginning of a strong upturn, according to a new report by Nationwide.

House prices have now risen in three out of the past fourth months and are 0.1% higher than in March last year. The three month on three month measure of house prices, which is considered a better measure of the underlying trend, meanwhile showed a modest rise of 0.6% in rise.

Official Land Registry figures released earlier this week however show that house prices fell 0.8% in February, the fifth month on month drop in six months, and are down 1.7% over the past year.

Robert Gardner, Nationwide’s chief economist, said: ‘The outlook remains uncertain, but all things considered, this is unlikely to mark the beginning of a strong upturn in prices’.

‘With the economic recovery expected to remain sluggish, the most likely outcome is that the property market will follow suit, with low transaction levels and prices moving sideways or modestly lower through 2011,' he said.

Gardner added that while demand is likely remain ‘fairly soft’, a rapid increase in the supply of property also appears unlikely.