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House prices continue to fall according to latest survey from Nationwide

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by Kay Mitchell
House prices continue to fall according to latest survey from Nationwide

According to the latest survey from the Nationwide, house prices fell by 0.9% in June. This is less than half the 2.5% fall experienced in May.

The Nationwide said that the average UK house price is now £172,415, which is 6.3% lower than in June last year.

In spite of the price falls over recent months, the decade-long housing boom, which continued until late last year, means that property prices remain 4% higher than two years ago and 9% higher than 3 years ago.

Property prices in Scotland faired a bit better according to Nationwide’s survey. Despite prices falling in the 3 months to June by 1.8% compared with the previous quarter, it was the only area to see an annual growth, up 0.6%.

Escalating oil prices have benefited areas such as Aberdeenshire, said the Nationwide. In addition, during the housing boom, prices in Scotland did not accelerate as much as other regions in the UK.

Figures released by the Bank of England yesterday revealed that 42,000 home loans were approved in May, which is a 27% decline compared with April and represents a 64% fall compared with a year ago.

The Bank said the figures were the lowest since it began recording the data in 1993. The figures were also lower than many analysts’ expected.

Since the credit crunch, financial institutions have tightened their lending criteria and has meant that mortgages have been hard to obtain.

According to the Nationwide, a lack of activity in the housing market is key to prices, however, its data indicates it was movers, rather than first-time buyers who are waiting to see what happens in the housing market.

First-time buyers made up for around 30% of transactions in the first quarter of the year, in line with the average over the previous 3 years, said the Nationwide.

Movers accounted for less than half of transactions in the same period, below the 55% average of the past 3 years.

According to Nationwide’s chief economist, Fionnuala Earley, the low transaction levels meant the trend with prices would continue.

Ms Earley believes it is unlikely that there will be any rapid turnaround in housing market fortunes over the next few months.

However, as values continue to fall, property becomes more affordable for those in a well-financed position to buy.

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News posted: July 1, 2008

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