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House prices down 10.5% in a year

House prices have fallen by 10.5 percent since 2007, the biggest annual fall in nearly two decades.

According to the August Nationwide House Price Index, house prices fell 1.9 per cent over the month, and 10.5 per cent since August 2007. This is the largest year-on-year drop since 1990.

The building society has calculated that the average UK house now costs £164,654, the lowest figure since the start of 2006.

Nationwide says it is surprised at the new mentality of UK borrowers.

Nationwide Chief Economist Fionnuala Earley, says: “Tracker loans have been cheaper than fixed rate loans since October 2007, but in spite of that the proportion of borrowers choosing a fixed rate loan has been increasing. This is unusual for UK borrowers who, as the Miles Review illustrated, attach enormous weight to the level of initial monthly repayments, rather than considering the potential movements in prices over a longer period.

“This change in behaviour could be an indication that borrowers are keen to be sure of their outgoings in uncertain times and wish to protect themselves, even though the choice may be more expensive in the short run.”

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Fraud costs housing associations £400m

State-funded housing associations are losing £400m every year due to fraud, says accountant BDO Stoy Hayward. It says vendors have inflated the price of land and houses by as much as 20 per cent.

Lending trend to go on falling

The Council of Mortgage Lenders believes that further falls in mortgage lending are on the way after gross lending figures for July showed a 27 per cent drop from last yearGross mortgage lending was £24.8bn last month compared with £34.2bn in July 2007, although there was a small rise from £23.6bn in June this year.

Tough times at estate agents

Savills Estate Agents saw a 45 per cent fall in transactions in the last year. Halifax Estate Agents is axing 53 branches and 100 jobs.

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