UK house prices drop again

UK house prices have fallen by 8.1 percent from a year earlier, the biggest decline since 1991 according to the Nationwide Building Society. The average home now costs £169,316, which is nearly £15,000 cheaper than in the same month last year.

In the meantime, consumer confidence fell to a record low as the economy is teetering closer to recession as the index of confidence based on a survey of 2,001 people by GfK NOP Ltd fell 5 points to minus 39. This figure represents the lowest since the data began in 1974, as Nationwide’s chief economist did indicate that the weakening economy and poor housing market sentiment suggests that the market will not recover quickly.

The Nationwide survey found that property prices were still £11,000 higher than three years ago, but currently sellers are remaining reluctant to accept lower offers, which along with lack of availability of mortgages, is pushing down house purchase activity which is having a negative knock-on effect to the rest of the economy.

The Bank of England said that the number of home loans approved in June fell to 36,000, down from 41,000 in May, but the National Housing Federation said that it was expecting house prices in England to rise by 25% by 2013.

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