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Nationwide warns on UK housing

After reporting pre-tax profits of £117 million for the six months to 30 September, a fall of 63% on the corresponding period last year, Nationwide has today warned of "inevitable downward pressure" on UK house prices next year. This is a stark warning from a company which is well respected in the UK property sector and would appear have its " finger on the pulse" of the UK housing market. So what is the problem?

While the reduction in half-year profits from £322 million to £170 million is due to a mixture of low interest rates, reduce returns on loans and a "dramatic fall" in UK commercial property prices, the company is more concerned about the future. Nationwide has commented upon the expected slow recovery in UK economy but the main focus was upon the housing market where the company believes that a "lack of supply" has been the main reason for the sudden push upwards in the price of UK property.

Many people are concerned about the economic outlook for 2010 with unemployment set to remain high for some time, mortgage liquidity difficult to say the least and the potential feel-good factor created by the forthcoming general election soon to disappear.

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