Prices will stabilise this year

Commenting on yesterday’s Nationwide house price index, Simon Rubinsohn, RICS chief economist said: "House prices slipped back in April after edging upwards in March according to figures released by the Nationwide Building Society. The resumption of a downward trend is not a surprise and broadly consistent with the main indicators contained in the RICS monthly Housing Market Survey. Both the price balance and the price expectations series remain deeply in negative territory suggesting that the pricing cycle has yet to reach a trough. However, the best lead indicator of prices is actually the RICS sales to stock ratio which has recently begun to edge upwards. This indicates that prices may begin to stabilise in the latter part of the year.

"A key risk to this view remain the weak performance of the economy but even with unemployment set to rise further, new supply onto the market is likely to remain constrained as potential distressed sellers avail themselves of the various government programmes to remain in their property. More positively, measures announced in the budget particularly on improving the flow of mortgage finance could help first time buyers to enter the market in a more meaningful way."