Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, said:
“UK house prices declined for the fourth time in five months in July, with prices falling by 0.7%. This pushed the annual pace of price growth down to -2.6%, from -1.5% in June – the weakest outturn since August 2009.
The weaker price trend observed in recent quarters is unsurprising, given the disappointing performance of the wider economy. Data released last week revealed that the UK recession intensified in the three months to July, with the economy contracting by 0.7% q/q. This disappointing outturn can be only partly explained by unusually wet weather and the impact of an extra bank holiday during the quarter. Indeed, the UK economy has contracted by 1.4% over the past nine months, and is now 4.5 percentage points smaller than it was in Q1 2008.”
Paul Hunt, managing director of Phoebus Software said:
“It’s very easy to point the finger and blame the fall in house prices on banks and building societies not lending enough. But these figures don’t reflect that. When Britain entered the recession at the end of last year, the macro-economic situation was bleak. Since then it has gone from bad to worse as the economy shrank more than expected in the second quarter of this year. That is subduing house prices. Public spending cuts have added to the underlying pressure. On top of that, the bad weather coupled with the extra bank holiday in June kept buyers at home when they would normally have been making competing offers on properties to buy, driving up prices. If it wasn’t for lenders’ commitment to the mortgage and housing markets – illustrated recently by innovative new products and low rates – we’d be in much worse trouble. And in the coming months there is hope the Funding for Lending scheme, starting today, will facilitate banks and building societies in offering even more loans at cheaper rates.”
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