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28 August 2008

House prices down 10.5%

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by Kay Mitchell

House prices down 10.5%

Nationwide is the first lender to publish figures for the UK’s housing market in August.

The building society has reported a 1.9% drop in prices during the month, taking the annual fall to 10.5%.

The average price of a home now stands at £164,654, or £19,000 less than in August 2007.

The lender says that the cost of a home has now fallen for 10 consecutive months and prices have returned to levels seen in early 2006.

However, while the monthly fall accelerated during August, the more reliable three-month on three-month figure shows that the decline eased slightly to 4.5%, from 4.6% in July.

According to Nationwide’s chief economist, Fionnuala Earley, recent data from estate agents could indicate that interest is returning to the market but the large number of properties for sale will be dampening any recovery in the short term.

In addition, the plight of Britain’s housebuilders highlights a lack of confidence in the market and the shortage of mortgage funds continues it impacting on house purchasing activity.

The Nationwide report also revealed that borrowers prefer the security of a fixed-rate loan despite the fact that trackers offer better value at the current time.

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