House prices down for eighth month

12 April 2012

House prices fell for the eighth month in a row during June, while annual growth fell at its fastest rate since the 1990s crash.

The average cost of a home in the UK slid by 0.9% during the month to stand at £172,415, while annual house price inflation slumped to minus 6.3%, the lowest level since December 1992.

The housing market downturn has now wiped 7.3%, or £13,500, off the value of homes compared with their peak in October last year, with prices falling by 6.4% since the beginning of 2008, according to Nationwide Building Society.

Nationwide said the pace of price falls had slowed "significantly" during June, following May's 2.5% dive, adding that prices were still 4% higher than they were two-years ago.

But figures from the Bank of England released on Monday showed that mortgage approvals for house purchases had slumped to a record low, suggesting there are further falls to come.

The Bank said just 42,000 new loans were approved for people moving during May, 28% below April's level and 64% down on the figure for the same month of 2007.

Economists, who branded the data "absolutely dire", warned that the current housing market correction could be worse than previously thought.

Government figures released last month showed that transaction volumes fell by 37% during May compared with the same month of 2007, while the Land Registry said the latest figures on house sales showed that they were running at half last year's level.

Fionnuala Earley, Nationwide's chief economist, said: "The tightening of credit conditions over previous months along with changing expectations of house price growth and a general weakening in consumer confidence in the economy have hit mortgage demand and led to a severe slowing in the levels of housing market activity."

Britain's biggest mortgage lender Halifax recently increased its forecast for house price falls during 2008 to 9%, while Capital Economics is expecting drops of 15% to 20% this year, with price declines continuing into 2010, and Global Insight expects homes to lose 24% of their value compared with their 2007 peak.

Create a FREE account to continue reading

eros

Registration is a free and easy way to support our journalism.

Join our community where you can: comment on stories; sign up to newsletters; enter competitions and access content on our app.

Your email address

Must be at least 6 characters, include an upper and lower case character and a number

You must be at least 18 years old to create an account

* Required fields

Already have an account? SIGN IN

By clicking Create Account you confirm that your data has been entered correctly and you have read and agree to our Terms of use , Cookie policy and Privacy policy .

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in