Nationwide: House prices fall ninth consecutive month

Permalink: Nationwide: House prices fall ninth consecutive month
by Kay Murchie

The latest Nationwide survey has found that UK house prices have fallen for the ninth consecutive month. This represents the biggest annual drop since the building society commenced its survey in 1991.

According to Nationwide, house prices fell by 1.7% in July and fell by 8.1% on a year-on-year basis.

The average cost of a home is now £169,316 which is £15,000 less compared with the same month last year. However, house prices are still £11,000 more than three years ago, according to the survey.

Commenting on today’s figures, Fionnuala Earley, Nationwide ’s chief economist, said the weakening economy and slowing housing market suggests that the market will not recover quickly.

Ms Earley said that consumers are cutting back on spending during the current economic climate. She added that swap rates (the main driver of mortgage rates) had fallen slightly, which had allowed new fixed rate mortgage deals to fall in cost.

As the cost of mortgages begins to fall, activity could be improved which will restore some liquidity to the housing market but this will not happen overnight, explained Ms Earley.

The fall in house prices follows an announcement by credit ratings agency, Standard & Poor (S&P), who said if property prices continue to fall at their current pace, around 1.7 million people could be pushed into negative equity in the next 12 months.

S&P said that the downward trend in UK house prices now seems well established, and that it expects the trend to continue in the short-term.

Furthermore, the Bank of England reported earlier this week that the number of new mortgages approved for house purchases has fallen by 68.4% in the year to June - the lowest level since records began in 1993.

The Bank said mortgage approvals fell from 41,000 in May to 36,000 in June. The number of mortgages approved has now fallen for 14 consecutive months.

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said steps must be taken to kick-start the mortgage market.