Nationwide: House prices fall 1.7% in July

House prices have fallen by £15,000 since this time last year says the Nationwide Building Society in reporting another price drop in July. 

July’s 1.7% fall in house prices accounts for £3,100 of the total losses and the UK’s largest building society prices warns prices are still on the slide. The cost of the average house fell to £169,316 this month from £172,415 in June. 

The housing market will not snap out of the current downturn because of the weakening economy and buyers’ lack of confidence, warned Nationwide. The building society said house prices are still around £11,000 above 2005 levels. 

‘As the cost of mortgages begins to come down, activity could be bolstered and restore some liquidity to the housing market…however this is not likely to happen overnight,’ said Fionnuala Earley, chief economist at Nationwide. ‘Overall the weakening economy and poor housing market sentiment do not suggest that the market will recover quickly.’ 

Rival house price index Hometrack reported a 1.2% fall this month while Rightmove, which tracks asking prices, also recorded a 1.2% drop in July. Last month prices fell by 0.9% according to Nationwide.

The pressure on houses prices will roll on as banks continue to restrict lending and house prices remain out of the reach for many first-time buyers, said Howard Archer, chief economist at Global Insight. The economic analyst predicted house prices falling 27% over the next two years. 

‘Indeed, it seems odds-on that house prices will continue to head rapidly south given that the Bank of England reported extremely low mortgage approvals for house purchases in June,’ said Archer.