UK House Prices Situation: Prices showing downwards trend

UK House Prices Forecast: 10% - 15% fall by end 2008

Nationwide Shows Fall In June…

July was definitely a month for falling house prices. Nationwide, the UK’s largest building society, reported a fall in average prices of 0.9% in June when it published its latest House Price Index.

Although a smaller fall than the 2.5% recorded in May, it was enough to bring the annual rate of house price inflation down to -6.3%; a substantial fall from this time last year.

Nationwide’s report also noted that mortgage approvals have continued to fall dramatically, with Bank of England figures showing that just 42,000 mortgages were approved in May – down from 58,000 in April.

Nationwide Chief Economist Fionnuala Earley commented that this trend alone made it unlikely that there would be “any rapid turnaround in housing market fortunes in the coming months.” However, Earley went on to say that as affordability continues to improve, “well-financed” buyers might be attracted back into the market.

…And So Does Halifax

The latest house price report from the Halifax painted an even glummer picture than that provided by Nationwide.

Halifax found that house prices fell by a full 2.0% from May to June – meaning a fall of 6.1% since last July. This means that house prices are now down to the level of August 2006, according to the Halifax figures.

Keen to try and paint a positive gloss on these gloomy figures, the Halifax report noted that house prices are still 196% higher than at their lowest point in 1995. However, this will be of no help to potential buyers and sellers. With housing transactions so low, it seems inevitable that house prices will continue to fall for some time yet as low demand and continuing tight mortgage availability means that buyers are in a very strong negotiating position.

Read about UK House Price indexes / key statistics that track the ups and downs of house prices

Read our take on the Credit Crisis the effect on UK House Prices and Mortgages. A Special Report

.