House prices drop 0.9% in August
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House prices have fallen by 0.9% in August, the second month in a row prices have dropped, the Nationwide House Price Index shows.
The average house price dropped by nearly £3,000 to £166,507 but the annual price change still showed a 3.9% increase on last August.
In July the monthly price drop was 0.5% and it is the first time since February 2009 that prices have dropped 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% in July to 0.0% in August
Martin Gahbauer, chief economist at Nationwide, says: “Unless house prices bounce back strongly in September, the three month rate of change will turn negative next month. The annual rate of inflation - which compares the current average price with the price level twelve months ago - remained in positive territory at 3.9%. However, it is down quite sharply from rates of 6.6% in July and 8.7% in June.
“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.
“There is little evidence of distressed selling, however, with the Council of Mortgage Lenders’ second quarter figures showing another drop in mortgage arrears and possessions. As such, the current period of price declines is likely to remain relatively modest. 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.”
