Nationwide plays down surprise house price bounce

House prices climbed in consecutive months for the first time in almost a year, Nationwide figures show, but the building society said prices were now more likely to move modestly lower through the rest of 2011.

The Nationwide House Price Index rose 0.5% in March, adding to a 0.7% bounce last month and marking the third monthly increase in four months.

On a three-month on three-month basis - considered a smoother measure of prices - prices are up 0.6%.

However, Nationwide chief economist Robert Gardner said the latest move falls short of a signal prices are set for a sustained rebound.

"The outlook remains uncertain, but all things considered, this is unlikely to mark the beginning of a strong upturn in prices," he said.

"The economy entered a soft patch at the back end of 2010, and there have been few signs of a strong bounce-back."

Gardner said demand is likely to remain fairly soft and a rapid increase in the supply of properties also appears unlikely.

"With the economic recovery expected to remain sluggish, the most likely outcome is that the property market will follow suit, with low transaction levels and prices moving sideways or modestly lower through 2011," he adds.