UK house prices fall 0.6% in March

This is the UK's biggest monthly fall in house prices since June 1995, but experts report that this is in line with expectations. 

Mary Spencer, of Tenerife Property Shop commented, 'Although we are experiencing a period of stability in our local market, the UK is prone to similar trends as the South of Tenerife.  The combination of a backlog of properties on the market from last year and a large volume of new instructions since January means stock levels remain at historically high levels. Prospective purchasers are faced with a wide choice of properties in many areas, and can afford to be choosy in terms of what they want.  This is ensuring that prices remain fairly constant.'

Rightmove, a UK property website, said 'over optimistic' sellers face months on the market, while agents report realistic sellers are agreeing deals below last year's boom prices'.

'Looked at in context it confirms the view that the market is experiencing a soft landing,' Alex Bannister, Nationwide's Group Economist said, 'The fall in March follows small rises in January and February and is consistent with our expectation that house price movements in 2005 would be characterised by rises in some months and falls in others. Seasonal adjustments hide the fact that the average house price actually increased by about '1,000 in March.'

Looking into the future, experts generally predict that we will be looking at a period of stability.

Tenerife Property Shop predict that the market will take the rest of the year to reach an equilibrium between demand and supply, before prices make any real rise.  Mary Spencer commented, 'The market is perfect for buyers at the moment.  There is a great deal of choice on the market and sellers are becoming realistic about their expectations.'

John Wriglesworth, Hometrack's Housing Economist, predicts, 'We expect prices to resume their long-term inevitable upward movement before the end of the year, fully compensating for the recent falls.  A more stable interest rate outlook, ongoing low unemployment, and rising household incomes will all help support rising house prices by the end of this year.'

Nationwide's Alex Bannister said, 'We believe that homeowners and buyers are becoming increasingly realistic about the potential for further house price growth. While expectations came down to earth in London a year ago, it is only recently that buyers in the rest of the country have downgraded their view of future house price inflation.  We expect the number of mortgage approvals will  bounce back, given the favourable economic conditions of low unemployment and relatively high consumer confidence.'