House prices edged up in November, beating expectations and despite a weak economy, but activity remains subdued and prices are more likely to dip in the next 12 months, mortgage lender Nationwide said.
House prices rose 0.4 per cent from October on a seasonally adjusted basis, their third straight monthly increase, a Nationwide survey showed. Prices were 1.6 per cent higher than a year ago, beating a forecast 1.3 per cent increase but the increase highlighted a lack of housing supply rather than any real pick-up in demand, Nationwide said.
The lender said prices were likely to be stagnant or fall slightly in the next 12 months.
"House prices have remained surprisingly resilient in recent months, despite the deterioration in the economic outlook. But, with the UK economic recovery expected to remain sluggish well into 2012, house price growth is likely to remain soft, with prices moving sideways or drifting modestly lower over the next 12 months," said Nationwide's chief economist Robert Gardner.
The volume of home purchases is still well below levels seen before the 2008/09 financial crisis and Nationwide said conditions had deteriorated in recent months as the UK economy saw heavy job losses and consumer sentiment hit a record low in October, according to a Nationwide consumer confidence survey.
The OECD said on Monday that Britain will slip back into recession early next year, dragged down by fears about the euro zone crisis, slowing export growth and weak demand at home.
Worries about the economic outlook, rising unemployment and squeezed household finances are expected to depress the housing market in the year ahead.
Britain's fiscal watchdog is expected to cut its growth forecasts while Chancellor George Osborne is set to announce help for small businesses and other measures to try and get the economy back on track.
Earlier this month the government announced a £400m plan to help boost home building and support first-time property buyers.