House prices dropped in December, as they normally do, but seasonally adjusted prices were up 0.2% m/m. That was a positive surprise after several months with price drops around 1.0% m/m. An increase in housing turnover of about 15% compared to December last year was also good news. But we would not put too much weight on the small positive signs. December is a month with low turnover in general, so price data may contain more noise than other months. In addition, turnover was extraordinarily low in December 2012 which means that despite turnover being higher in December 2013 than in 2012, it was still lower than normal.
Looking at other details in the report we find arguments for further weakness:
· Time on market increased substantially again in December to 49 days from 37 in November and 43 in December 2012.
· Number of houses for sale was 43% higher than in December last year.
We still believe the underlying trend in house prices will be weak going forward despite a slightly more positive development than expected in December.
Nordea