House prices show 2.6% decrease
Wednesday 01 August 2012
House prices have recorded their biggest year-on-year decline in almost three years amid the toughening economy, Nationwide building society said today.
But the market has shown "resilience" compared with some other countries, despite the 2.6% annual drop taking average prices to £164,389 in July, Nationwide added.
UK house prices are 13% below their 2007 peak, but this is still less than the falls seen in the United States and Spain, which have seen drops of around a fifth relative to their peak.
The study said the Bank of England's new "funding for lending" scheme could give a boost to the housing market, but with the eurozone crisis continuing, Nationwide expects to see only a "modest recovery" in the coming months.
The latest research comes after the British Bankers' Association found that mortgage approvals slumped to their lowest number in at least 15 years in June.
Lenders have also been tightening their borrowing criteria and while there have been signs of increased competition to attract people with larger amounts of equity, borrowers with lower deposits are expected to have a tougher time finding a mortgage in the coming months.
Robert Gardner, Nationwide's chief economist, said: "UK house prices declined for the fourth time in five months in July, with prices falling by 0.7%.
"This pushed the annual pace of price growth down to minus 2.6%, from minus 1.5% in June - the weakest outturn since August 2009."
Mr Gardner said the unseasonal wet weather and the impact of the extra holiday due to the Queen's Diamond Jubilee can only partly explain the "disappointing performance" of the wider economy.
He said: "Against this difficult backdrop, it could be argued that UK house prices have shown resilience.
"While prices are currently 13% below their 2007 peak, this is less than the declines seen in a number of other economies that have experienced similar or more robust economic recoveries."
The study said that along with a lack of building activity in recent years, a large part of the explanation for UK house prices performing relatively well probably relates to the "unexpected strength" of the UK labour market.
Much of the housing market will depend on the ability of the economy to gain momentum, as a previous pattern of negative economic growth and steady employment growth cannot be sustained indefinitely, the study said.
Life & Style blogs
The food poverty scandal that shames Britain: Nearly 1m people rely on handouts to eat – and benefit reforms may be to blame
US Navy christens huge $3 billion destroyer ship USS Zumwalt that appears as a fishing boat on enemy radar
Scottish independence: It is the English who should be on their knees, begging the Scots to vote ‘No’
Nigel Farage fatigue? Half of voters ‘immune’ to Ukip’s appeal
Nigel Farage: I’m taking on the status quo, and the Establishment’s fighting back
Refugee facing deportation from Sweden saved by fellow passengers refusing to let plane leave
- 1 KFC 'sorry' after lesbian couple are kicked out of Bath restaurant for 'heavy petting'
- 2 West Ham confirm 20-year-old striker Dylan Tombides has died after battle with cancer
- 3 24 people applied for the 'world's toughest job', here are their interviews
- 4 Video of British Muslims dancing to Pharrell Williams's hit Happy attacked as 'sinful'
- 5 PFA Player of the Year: Luis Suarez, Daniel Sturridge and Steven Gerrard all nominated as Liverpool dominate award shortlist
£150.00 per week: QA Apprenticeships: This company is a company that specializ...
£153.75 per week: QA Apprenticeships: This company is an innovative outsourcin...
£150.00 per week: QA Apprenticeships: This company has been providing on site ...
£150.00 per week: QA Apprenticeships: We've been supplying best of breed peopl...