House prices slide 0.1% in January
Latest Nationwide figures show house prices averaged 161,602 last month, taking prices below their September 2009 level
The property market entered 2011 with a "whimper rather than a bang", with house prices edging down by 0.1% month on month, according to figures released by the Nationwide this morning.
However, annual house prices were 1.1% lower last month compared with January 2010, producing an average price of 161,602 1,161 lower than December's average and taking house prices back to below their September 2009 level.
Robert Gardner, Nationwide's chief economist, said: "January's data does little to alter the picture of a sluggish market that has been evident since the summer. Indeed, the three month on three month measure of house prices, which is a better measure of the underlying trend, showed a fall of 0.5%, consistent with the gradual moderation in prices that has been in place since the summer of 2010.
"The outlook is still highly uncertain, but the most likely outcome is that the pattern of low transaction levels and prices moving sideways or modestly lower will continue through 2011."
He said that increases in food, transport and utility costs were hard for households to deal with as they were costs that were difficult to cut back or substitute with cheaper alternatives. They would therefore have a dampening effect on demand for property, especially as persistantly high inflation increased the risk of interest rate rises.
However, Gardner believes the Bank of England monetary policy committee will raise rates gradually, and most likely in the second half of the year.
"This in turn should have only a relatively modest impact on the housing market, especially since it is likely to take place against the backdrop of a strengthening economic recovery," he said.
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