Nationwide says UK house prices drop by record amount

The Nationwide Building Society said today that house prices fell in May by the most since at least 1991, due to a combination of economic uncertainty and the lack of available credit. This has caused a shrinkage in the number of buyers as mortgage approvals dropped in April by 39 percent from last year.

In May, prices fell by 2.5 percent compared to 0.9 percent, and over the spread of the year, average house prices are now 4.4 percent lower than last year.

This is the sharpest annual fall since the last slump in 1992, where 6.3 percent was wiped off the value of the average home. Property values have now declined for seven consecutive months.

As the Bank of England Governor, Mervyn King, correctly predicted property were values were “likely to fall further” it seems that the UK economy could also be heading to the same fate.

The market is now beginning to stagnate as homeowners are paying more for mortgages. Financial institutions have increased the cost home loans and the 5 percent deposit is now seemingly across the board.

The days of buy to let and first time buyer 125 percent LTV mortgages are a distant memory.

It seems as the government is also downbeat, as the housing minister Caroline Flint fuelled controversy around the housing market by revealing that the government do not know how bad it will get.

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