House prices show 'marginal' rise, but uncertainty ahead

House prices showed a ‘marginal’ rise of 0.1% in September, Nationwide reported today as it indicated uncertainty about the future direction of house prices.

‘Where house prices go next will depend on whether the strong flow of new property onto the market continues into the autumn, and on the extent to which existing sellers are willing to compromise on their asking price in order to make a quick sale,’ said Martin Gahbauer, the building society’s chief economist.

Although September was ‘uneventful’, Nationwide’s figures show that in total prices have dropped in the third quarter of the year. Moreover its preferred three month on three month rate of change has fallen.

There has been an increase in the number of properties for sale that has not been met by demand in recent months. Gahbauer suggested two conflicting scenarios for prices going ahead. If the new sellers are speculative, seeking to take advantage of 2009’s price rises, then prices may stagnate. But if most of the new sellers are keen for a quick deal then ‘the recent slight downward trend in prices may continue’.

Gahbauer also pointed to the uncertainty in the labour market as a key factor in determining future price movements.

While many commentators point to an impending house price decline, the many different house prices indices have painted a mixed picture. Nationwide’s figures come days after Hometrack reported that home values had dropped by the most in 18 months. Halifax, which has not yet issued its report for September, has seen house prices increase for two months in a row, reversing much of the decline the bank had reported in previous months.