March 28, 2008

Nationwide says property will keep falling

Written by Brian Turner

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The Nationwide reports property prices are still falling - and that it now expects this trend to continue to the end of the year. A more pessimistic opinion than it previously held.

The Nationwide Building society has reported that property prices across the UK fell by 0.6% in March.

It makes this the fifth month in a row that property prices have fallen, and now means that property inflation over the past 12 months is just 1.1% - the lowest since March 1996.

Additionally, the Nationwide has revised downwards its forecast for the UK property market.

Previously expecting prices to stagnate, the Nationwide is now predicting property prices to continue on a downward trend. As the Bank of England previously held the more optimistic view, it remains to be seen if this will be reversed downwards.

The HSBC and Morgan Stanley have already warned that house prices could see a correction of between 10%-30%, and investment bank Dresdner Kleinwort warns the market is set to implode.

However property markets move, it should create too much concern for residential owners who are looking to the long term for their property.

The main danger is the actual impact on the expanding buy-to-let sector, which has been flooded with inexperienced investors over the past few years.

Overall, though, the message is clear - in the short-term at least, the UK property market is anything but a good overall investment.

Filed Under Money