House prices fell for the second consecutive month in August prompting further fears over the state of the property market.
According to Nationwide, house prices dropped a further 0.9% in August. This was on the back of a 0.5% fall in July.
The annual rate also fell to 3.9%, the lowest yearly rise since November 2009, with the average house price now £166,507.
Martin Gahbauer, Nationwide’s Chief Economist, said: “Recent market trends remain consistent with an unwinding of the supply-demand imbalance that drove up prices for much of the last year.
As more sellers have returned to the market, buyers have a greater selection of properties to choose from and more bargaining power with which to bid down asking prices.”
Nationwide also said that the 3 month on 3 month rate of change – generally a smoother indicator of the recent price trend – fell from 1.2% in July to 0.0% in August, suggesting that house prices have essentially stagnated over the summer.
MoneyHighStreet comment – It’s questionable what will now happen to house prices but it feels difficult to be optimistic. We know that financial difficulties for many remain and are set to continue and hit more as the public sector in particular faces serious job losses.
There’s also the issue of mortgage availability. Many borrowers, particularly first time buyers, are struggling to access the most competitive mortgages as many lenders continue to demand high deposits and a squeaky clean credit history for these.
It seems we are in for a further drop in house prices – perhaps a further 2-3% drop this year and around a further 5% drop in 2011.