Nationwide figures show record drop in house prices

01 August 2008

Average UK property price now £169,316

According to figures from Nationwide building society released yesterday, property prices saw a decrease all through July, leading to the largest year-on-year drop since the property market crashed in at the beginning of the 1990s.

The average UK property now costs £169,316. This means property prices have decreased by £15,000 in a 12 month period and are now lower than at any time since August 2006.

The Nationwide figures showed a 1.7% drop in prices over the course of the month. This is double the 0.8% drop seen in June by the building society.

In June, the annual decline in property prices stood at 6.3% whereas in July this figure has increased to 8.1% and marks the largest year-on-year decline since Nationwide began its price index in 1991.

According to Fionnuala Earley, chief economist at Nationwide, some of the current slowdown in market activity could be because those selling their homes were reluctant to accept lower offers.

Earley added that the slowdown had been exacerbated by the reduction in funds available to borrowers because lenders have tightened their lending criteria.

Earley added: “There are around 41% fewer first-time buyers now than at the same time last year.

“This may be due to their own desire to delay purchase because they expect prices to continue to fall, or frustration in obtaining finance, but the impact on the market is likely to be the same.

“As the cost of mortgages begin to come down, activity could be bolstered and restore some liquidity to the housing market.

“However, this is not likely to happen overnight. Overall the weakening economy and poor housing market sentiment do not suggest that the market will recover quickly,” she added.