The latest Nationwide House Price Index found that the annual fall of house prices in August 2008 was -10.5%, which is the biggest rate of decline since Q4 1990, meaning that the average home has now lost over £19,000 in the last 12 months..

In August alone, house prices dropped -1.9%, which is the tenth consecutive month that the index recorded a decrease. According to Nationwide, the average house price now stands at £164,654 from £169,316 in July. Nationwide’s index records the price of a house by the mortgage offered, and so these are not sold or asking prices.

Fionnuala Earley, chief economist at Nationwide, believes that although there are reports of some interest returning to the housing market, it still remains very subdued. She expects house prices to continue to fall as estate agents reported an increase in properties on their books yet transactions remained low.
Earley is of the opinion that the Bank of England’s (BoE) next move will be to cut the base rate but that this will have a limited effect on the sector. Earley told PIN: “Consumer sentiment is the key to the market recovering. A change in the base rate will have some effect but the major problem for the housing sector is one of confidence. The market needs some stabilisation before real improvements will be seen. We will need to wait and see whether the next set of economic data is as strong as it has been in the United States.”