House price fall accelerates in July
Nationwide building society reported a faster fall in house prices in July, as the economy continues to falter.
House prices fell by 0.7 per cent in July, the fourth time they have declined in five months, and the fastest fall in three years.
The average house price is now £164,389, 2.6 per cent lower than a year ago.
Nationwide attributed falling property values to the recession.
The building society’s chief economist, Robert Gardner said: “The weaker price trend observed in recent quarters is unsurprising, given the disappointing performance of the wider economy.
“The UK recession intensified in the three months to July, with the economy contracting by 0.7% quarter on quarter.
Nationwide warned that the government’s £80 million Funding for Lending scheme, launched today, and further economic stimulus by the Bank of England, are likely to generate only a modest recovery, with the ongoing eurozone crisis limiting the gains from these initiatives.
The Funding for Lending scheme is designed to increase the flow of credit from lenders to businesses and households.
Earlier this week, property analyst Hometrack reported signs of a
property market slowdown.
The company revealed a 0.1 per cent fall in house prices in July, with activity slowing significantly in London and the South East – regions that have previously helped to keep average prices up.
However, Hometrack said that the decline in property prices in the north of England could be bottoming out.
The latest figures from the Bank of England reveal that new mortgage approvals are at their lowest since 2010.
Just 44,192 loans for house purchases were approved in June, compared with a 25-month high of 50,544 in May.
This represents a 10 per cent fall year-on-year and is another indication of the ongoing weakness in the UK housing market.