Nationwide: House prices fall for eleventh consecutive month

Permalink: Nationwide: House prices fall for eleventh consecutive month
by Kay Murchie

According to the Nationwide, UK house prices fell 1.7% last month while an annual drop of 12.4% was recorded, which represents the largest annual fall since records began.

The building society said the cost of an average UK home is now £161,797, over £20,000 less compared with this time last year.

However, despite the sharp annual fall, there is evidence that the rate of decline is stabilising, said the Nationwide.

East Anglia and the South West recorded the largest annual falls at 11.4%, while the sharpest annual fall of 29.8% across the UK was noted in Northern Ireland.

Meanwhile, in Scotland where prices have bucked the trend, a fall of 5% was recorded between July and September compared with the previous three months.

Wales experienced the smallest fall in prices compared with other areas of the UK, with a three-month on three-month drop of 1.9% in July to September.

Fionnuala Earley, Nationwide’s chief economist, said house prices have now fallen for 11 months in a row, however the monthly rate of fall has been almost unchanged in the last three months.

Ms Early added that over the last 12 months, the housing and financial markets have experienced some astonishing and unpredictable developments.

In the long-term, Ms Earley does not see any reason why house prices would not continue to grow in real terms, despite the ‘sharp correction‘ now.

How long the correction lasts and how much more prices have to fall depends on consumer confidence and an end to the turmoil in the financial markets, adds Ms Earley.

Despite the recent house price falls, the average cost of a home is still 60% more than it was at the start of the decade, according to the Nationwide, while prices are now back to the same level as the third quarter of 2006.

Commenting on Nationwide’s figures, Simon Rubinsohn, chief economist of the Royal Institution of Chartered Surveyors, said they are not surprising given the turmoil in financial markets over the last few weeks.

The recent increase in some mortgage rates and the continuing squeeze on the supply of loans could lead to further price falls over the coming months, added Mr Rubinsohn.