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UK house prices are now in their worst slump since the aftermath of the 2009 financial crisis after falling three months in a row, new data has revealed.
House prices fell 0.2 per cent in May, following a 0.4 per cent drop in April, Nationwide said on Thursday. A Reuters poll of economists had predicted a drop of 0.1 per cent.
The latest figures further highlight the impact of the Brexit vote last June, as well as tax hikes that came in last April.
House prices were up 2.1 per cent year-on-year – a sharp decline from the 2.6 per cent Nationwide recorded in April – and the weakest growth since 2013. The average value is now £208,711.
Nationwide said that the weak pound, which has lost 13 per cent of its value against the dollar since the Brexit vote last June, could be to blame for falling house prices.
Budgets have been squeezed as inflation has picked up and price increases have outpaced wages. The building society also said “affordability pressures” may be dragging house valuations down.
“It is still early days, but this provides further evidence that the housing market is losing momentum,” said Robert Gardner, Nationwide's chief economist.
Mortgage lending grew £2.7bn (the least since April 2016) as new data from the Bank of England shows.
Lenders approved 64,645 home loans in April, the lowest monthly figure since September, and well below economists’ forecasts.
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Halifax reported earlier this month that house prices fell 0.2 per cent in the three months to April: their first quarterly decline in more than four years.
Meanwhile, consumers took advantage of low interest rates to rack up an extra £1.5bn of unsecured debt in April. Consumer credit has risen by 10.3 per cent in the past twelve months, the Bank of England said.
That suggests shoppers may be compensating for rising prices by taking on cheap debt to finance purchases.
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