The latest Nationwide House Price Index found that house prices fell by -1.7% in July, which is more than double June’s fall of -0.8%.

This is the ninth consecutive month that the index has recorded a decrease. According to Nationwide the average house price now stands at £169,316 from £172,415 in June. House prices are now -8.1% less than they were 12 months ago, meaning that the average house has lost almost £15,000 over the last year.

Fionnuala Earley, chief economist at Nationwide, believes the lack of credit has played a major part in the slowing of housing market activity and therefore the fall in house prices. Earley is of the opinion that although there are no signs that the market will recover quickly there may be a glimmer of hope for borrowers. If oil prices continue to fall and the Monetary Policy Committee (MPC) believes there is control over inflation then they could reduce the base rate sooner than expected.

A spokeswoman for Nationwide told PIN: “A cut in the base rate could help to stimulate the mortgage market, but it is unlikely in the short term given the weaker economy. As the economy is slowing, it is difficult to see what would turn sentiment around rapidly in the housing market. However, falling fixed-rate mortgage deals may begin to stimulate some activity, and falling house prices will have improved affordability a little.”