Nationwide Says UK House Prices Same as Last Year, but Only Way is Down

Nationwide released its index for September today and said that house prices rose 0.9% on average in September, bringing prices back to similar levels as they were in 2009. This comes just days after the Land Registry revealed that house prices had fallen 0.1% in August according to its data.

So, does that mean that the Land Registry was just a blip and prices will be rising again in September?

The answer is no. Nationwide has shown prices rising for the last 5 months in a row, and is the only index that shows prices anywhere near the same as they were last year. This is because Nationwide's house price index is based on mortgage approvals, and because Nationwide's customer base is predominantly in the south west where housing supply is at its shortest.

I will wager now that the Halifax index, when it is released in a few days, will show that house prices have fallen based on mortgage approvals among its customer base, which is predominantly in the north.

I say this because the Land Registry had shown prices rising in July, as did Nationwide and Halifax, which meant that the rises in the South West fuelled by supply shortages were big enough to swallow up the falls in the north. For the Land Registry now to be showing a fall means that the falls in the north must now be big enough to swallow up the gains in the south west, and so the Halifax index will come out negative.

Not an exact science I know but you just see if I'm right.

Even Nationwide are realistic about what the price rises mean, Chief housing economist Martin Gahbauer said:

"Given that the housing market still faces considerable headwinds in the form of high unemployment, restrictive credit conditions and an impending withdrawal of the stamp duty holiday, it would be surprising to see house prices continuing to increase at the very strong rate seen in recent months."