Property prices slip for second month running

House prices fell for the second month running in August, the first time that has happened for five years, Nationwide building society said yesterday.

House prices fell for the second month running in August, the first time that has happened for five years, Nationwide building society said yesterday.

The average price of a home dipped by 0.6 per cent - or about £400 - between July and August to £80,737. That followed a 0.2 per cent slip a month earlier.

The latest figures mean that house prices have risen by just 1 per cent over the past three months compared with the previous quarter - the lowest rate of growth since the autumn of 1995. Annual house price inflation is now running at 11.2 per cent, the lowest for almost a year and well below a peak of 17.5 per cent seen in April.

David Parry, divisional director at Nationwide, said if prices rose no further over the rest of 2000, annual price inflation would be 6 per cent.

"Some of the price rises over the last 12 months in many of the UK's 'hot spots' were not sustainable," he said. "Vendors are being forced to be more realistic."

Nationwide said there were signs that the recent surge in prices had prompted people to make improvements to their homes rather than move house. "People are changing rooms, not changing houses," he said.

The figures were issued as one of the leading players in the housebuilding industry said the "froth had come off the market". Wilson Connolly, which announced a 48 per cent surge in pre-tax profits for the first half of the year to £30.1m, said price rises of between 15 and 20 per cent were unsustainable. David Lawther, its finance director, said: "It's good news that the market has come off the boil and we expect to see a more stable market going forward with growth in the order of 5 to 6 per cent."

Further evidence of a slowdown came from a separate report from the Chartered Institute of Purchasing and Supply. It showed activity in the housebuilding sector fell for the first time since the start of the recent mini-boom inFebruary 1999.

The Nationwide report is the latest to indicate the market is cooling. Last week the Land Registry, a government department, said the rate of house price inflation eased between the first and second quarters of the year.

Last month the Royal Institution of Chartered Surveyors said house prices fell in July for the first time since the global financial crisis of 1998.

* The North/South divide in house prices is continuing to grow, according to figures released yesterday by the Yorkshire Building Society.

Yorkshire, which is the fourth biggest building society in the UK, said the value of mortgages taken out in the South-east had jumped on average by 9 per cent this year, compared with the second half of last year. That compared with an increase of just 1.2 per cent in Yorkshire and Humberside over the same period.