House prices recorded a fourth fall in five months in July and ended the month 13 per cent down on their 2007 peak, according to figures from Nationwide.
The building society’s figures show the price of a typical UK house fell by 0.7 per cent in July, bringing the annual decrease to 2.6 per cent. Someone selling a typical home could have expected a valuation of £165,738 (Dh945.78) in July 2011, the building society said; now the same property would be valued 1,349 lower at £164,389.
The 2.6 per cent fall was the biggest year-on-year drop since August 2009 and put house prices 13 per cent below their 2007 peak. Despite this the building society proffered an optimistic view on the figures.
“The UK economy has contracted by 1.4 per cent over the past nine months and is now 4.5 percentage points smaller than it was in Q1 2008,” Nationwide’s chief economist Robert Gardner said.
“Against this difficult economic backdrop it could be argued that UK house prices have shown resilience. While prices are currently 13 per cent below their 2007 peak this is less than the declines seen in a number of other economies that have experienced similar or more robust economic recoveries.”
Gardner added that he continued to expect a modest recovery in the quarters ahead, both for the UK economy and the housing market.
However, Howard Archer, chief UK and European economist at IHS Global Insight, who has predicted for some time that houses prices will fall by at least three per cent in 2012, appeared to be even more bearish about the market on the back of the Nationwide data.
“We expect house prices to end up losing at least three per cent from current levels,” he said. “In fact, with the economy slumping in the second quarter and the outlook highly uncertain as the Eurozone crisis grinds on, we believe there is a mounting danger that house prices could fall by appreciably more than three per cent.”
He added: “It is possible that house prices will gain some support from a shortage of properties on the market, but this tends to vary markedly between regions as a factor.”
Commentators were reserved on whether the government’s Funding for Lending scheme would make a difference to the number of people buying properties. Archer said this could have some impact down the line but would not make any marked difference in the short term, while others said any new lending would have to offer appreciably better deals to first-time buyers.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “So far, the best deals have been for those with sizeable deposits, which won’t give the housing market the kick-start it so desperately needs.”
The strained property market is having an impact on even the biggest estate agency chains. LSL Proeprty Services, which includes Your Move, Reeds Rains and Marsh Parsons estate agents, announced it is to shut some of its branches because of poor house sales.
Shares in the group fell 13 per cent yesterday after it said it was putting aside another 17.3m to meet claims from lenders who are disputing valuations of properties they lent mortgages on during the property boom.