Dive in UK house prices continues
UK house prices dived by a record 16.6% during the past year, Britain's biggest building society said today.
The average cost of a home fell for the 15th month in a row during January, with properties losing a further 1.3% of their value, according to Nationwide.
The latest slide leaves the average house costing £150,501 (€163,768) - more than £35,500 (€38,629) less than at its peak in October 2007.
The Land Registry also released figures today, with these showing that house prices in England and Wales fell by 2% in December, pushing the annual rate at which prices are declining up to 13.5%.
The North East was the only region of England and Wales not to see further price falls during the month, with the West Midlands suffering the steepest drop of 3.6%, followed by the South West with a 3.1% fall.
Sales volumes also continued to decline, with only 44,934 properties changing hands on average each month between July and October, less than half the 110,517 properties that were sold each month during the same period of 2007.
Martin Gahbauer, Nationwide's senior economist, said: "The deepening economic recession and financial market turbulence continued to weigh on housing market sentiment and activity."
But he added that Nationwide's three-month on three-month rate of change, which is generally seen as a smoother indicator of short-term trends in prices, had improved for the fourth month in a row.
The price drop seen during the three months to the end of January was 4%, compared with a fall of 4.2% during the previous three-month period, although Mr Gahbauer cautioned that it was too early to say that this marked the beginning of a sustained improvement in the short-term trend.
Instead, he warned that a pre-condition for a recovery in the UK housing market would be an end to the deterioration in the wider economy.
The housing market is being hit by a combination of the mortgage shortage, rising unemployment and an expectation among potential buyers that prices still have further to fall.
Howard Archer, chief UK and European economist at IHS Global Insight, said: "The housing market started off 2009 with a further marked drop in prices, and it seems set for another very difficult year given that current largely unfavourable fundamentals are likely to persist for some time to come."
However, anecdotal evidence suggests that recent steep interest rate cuts, combined with the sharp fall in house prices seen during the past year, are beginning to tempt potential buyers back into the market.
The latest figures from the British Bankers' Association showed a 27% jump in the number of mortgages approved for house purchase during December, although economists stressed that the rise was from exceptionally low levels, and at best was likely to indicate that the steep drop in approvals may have bottomed out.
Allan Monks, of JPMorgan Chase Bank, said: "Although the trend in prices remains clearly downward, the Nationwide has shown some signs of a moderation in the pace of decline.
"The pick-up in BBA mortgage approvals for December, and the recent rise in the Royal Institution of Chartered Surveyors' new buyer inquiries has offered some tentative signs of a mild improvement in the housing market.
"After the near-17% drop in house prices, our forecast anticipates a smaller 9% decline this year."
