House prices fell for the second consecutive month in August, according to the latest Nationwide house price index.
House prices fell 0.9 per cent month-on-month in August and 0.5 per cent in July with the average property price falling from £169, 347 to £166,507.
Year-on-year house prices were 3.9 per cent higher in August, however the annual rate of house price inflation was down sharply on July’s figure of 6.6 per cent and June’s figure of 8.7 per cent.
Nationwide chief economist Martin Gahbauer says: “This is the first time since February 2009 that house prices have fallen in two consecutive months.
“The three month on three month rate of change – generally a smoother indicator of the recent price trend – fell from 1.2 per cent in July to 0.0 per cent in August, suggesting that house prices have essentially stagnated over the summer.
“Unless house prices bounce back strongly in September, the three month rate of change will turn negative next month.”
Gahbauer says the figures show an increase in housing supply with more homeowners prepared to put their properties on the market.
He says: “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.”
But he says that there is little evidence of distressed selling with the Council of Mortgage Lenders reporting a drop in arrears and repossessions. He believes this means the current trend of house price falls is likely to be modest.
He adds: “Given that the price increases of the last year had gotten ahead of the recovery in the wider economy, the current correction is not an unhealthy development.”