House prices drop 8.1pc

House prices drop 8.1pc, says Nationwide

By Stephen Adams

House prices have tumbled 8.1pc in the past year, a record rate of decline, figures from the Nationwide show.

The pace of annual decline is unprecedented since the building society started its monthly house price index in 1991. Property values dropped 1.7pc in the last month alone. The rate has more than doubled in a single month from a 0.8pc loss in June.

The average property has shed almost £17,000 in value since prices peaked last October, coming down from £186,044 to £169,316 - the lowest level since August 2006.

Fionnuala Earley, Nationwide's chief economist, said: "The price of a typical house fell by 1.7pc in July, bringing the annual fall to 8.1pc. "This brings the average price to £169,316, almost £15,000 less than this time last year and its lowest level since August 2006.

"House prices have now been falling for nine consecutive months, but on average are still almost £11,000 higher than three years ago."

The figures follow a prediction by Standard & Poor's, the world's largest credit rating agency, that one in seven British home owners could fall into negative equity over the next year.

Miss Earley warned "fairly poor" economic data and the collapse of retail sales in June suggested economic conditions were weakening, but she added there was "encouraging news for the housing market".

"Only a month ago the market was expecting the Monetary Policy Committee [of the Bank of England] to increase the Bank Rate twice this year: they now expect no change." This had aided 'swap rates' - which help determine fixed interest mortgage rates - to come down, she

Pound to Euros is lower today at 1.2650