Wednesday, May 04, 2011
House prices flat, construction growth weaker
Posted by David Smith at 09:50 AM
Category: Thoughts and responses

House prices slipped by 0.2% in April, according to the Nationwide building society, and were down by 1.3% on a year earlier. In cash terms prices are flat but factor in inflation and a real price fall is occurring of perhaps 5%-6%. This is the kind of adjustment we saw in the first half of the 1990s. Interestingly, Nationwide now has real house prices below their long-term trend. More details here.

Housing is not helping the wider economy. According to Markit and the CIPS, the construction purchasing managers' index dropped from 56.4 in March to 53.3 in April, with weak housebuilding and civil engineering to blame for this slowing in the pace of growth. The construction numbers were similar to those for manufacturing, suggesting a slower start to the second quarter.