House price gains reversed


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House prices fell by 0.6 per cent in August, according to Nationwide Building Society, wiping out the 0.3 per cent gain identified by the mortgage lender in July. The average UK house now costs £165,914.

Nationwide's chief economist, Robert Gardner, said that "for some time the residential property market has been moving sideways, as weak demand for homes co-existed with a situation where relatively few homes were coming on the market". However, he pointed out that weak UK economic growth would be likely to result in interest rates remaining low, which would provide some support for mortgage borrowers.

Howard Archer, of IHS Global Insight, said: "The fall in house prices in August ties in with our belief that house prices are likely to trend down gradually over the coming months in the face of persistently weak economic activity, rising unemployment and low consumer confidence."