The Nationwide Building Society has published its UK House Price data for March 2013. The Nationwide tends to be the first of the two UK building societies (the other being the Halifax) to produce house price data each month, it is one of the information sources referenced by NAMA’s Long Term Economic Value Regulation and is the source for the UK Residential key market data at the top of this page.
The Nationwide says that the average price of a UK home is now GBP 164,630 (compared to GBP 162,638 in February 2013 and GBP £162,764 at the end of November 2009 – 30th November, 2009 is the Valuation date chosen by NAMA by reference to which it values the Current Market Values of assets underpinning NAMA loans). UK prices are up 0.8% over the the past 12 months and are now 11.5% off the peak of GBP £186,044 in October 2007. Interestingly the average house price at the end of March 2013 being GBP £164,630 (or €195,152 at GBP 1 = EUR 1.1854) is 24% above the €156,855 implied by applying the CSO February 2013 index to the PTSB/ESRI peak prices in Ireland. It should be said that in the UK, the Nationwide Building Society adjusts the actual prices for seasonal factors and reports that prices were flat in March 2013. The view on here is that seasonality is irrelevant in the market.
With the latest release from Nationwide, UK house prices have increased 1.1% since 30th November, 2009, the date chosen by NAMA pursuant to the section 73 of the NAMA Act by reference to which Current Market Values of assets are valued. The NWL Index is now at 779 (because only an estimated 20% of NAMA property in the UK is residential and only 29% of NAMA’s property overall is in the UK, small changes in UK residential have a negligible impact on the index) meaning that average prices of NAMA property must increase by a weighted average of 28.4% for NAMA to breakeven on a gross basis.
According to the Nationwide this morning, the outlook for 2013 is uncertain but recent developments in the provision of credit for first time buyers and other initiatives may lift activity slightly,
“The outlook for the housing market is unusually uncertain at present, in part because the prospects for the wider economy are unclear, but also as the impact of a number of policy initiatives is hard to gauge”
The Nationwide has also released its analyses for the first three months of 2013, which surprisingly show Northern Ireland outperforming the rest of the UK for Q1,2013, and that is the first time that’s happened for at least five years. Anecdote from Northern Ireland does suggest that there is competition for well-located family homes; might the world’s worst property crash finally be coming to an end?
The UK economy is suffering difficulties almost every bit as challenging as those in the EuroZone and Ireland. Sure, they have their own currency and they’ve printed GBP 300bn of it in an economy with a GDP of 1.5tn, to help inflate their problems away. And yet they appear poised for a triple dip recession. On 20th March 2013, the UK’s independent Office for Budget Responsibility published its latest fiscal outlook which forecasts GDP for 2013-2017 at 0.6%, 1.8%, 2.3%, 2.7% and 2.8% (but as with all economic forecasts in the long term, all forecasters forecast a peachy outlook!). Deficit:GDP is forecast for 2013-2017 as 6.8%, 6.0%, 5.2%, 3.5% and 2.3%. Debt:GDP is forecast in 2013-2017 at 94.9%, 98.6%, 100.8%, 100.8% and 99.4%. Inflation is forecast for 2013-2017 at 2.8%, 2.4%, 2.1%, 2.0% and 2.0%. It expects residential prices to increase 0.9%, 1.9%. 3.6%, 4.0% and 4.0% in 2013-2017 and commercial property to change -0.1%, 2.6%, 3.6%, 3.8% and 3.4%.