House prices in the UK continue to plummet, dropping 0.7% lower in July making the average property value for the month its lowest since 2006, according to Nationwide.
Property price drop ‘unsurprising’
The typical price of a home last month was £164,389 - a drop of £3,334 from six years ago, £1,349 less than in June of this year and 2.6% less than July 2011.
Average house prices had continued to grow steadily for the first six months of the year going from £162,228 in January 2012 to £166,022 in May however June marked the start of the negative growth pattern. Experts suggested that this may have been due to knock-on effect of the end of the ‘stamp duty holiday’.
This news on July house prices comes shortly after recently released statistics highlighted that the recession in Britain is set for a ‘triple-dip’ as GDP fell sharply in the second quarter of 2012.
Nationwide’s Chief Economist, Robert Gardiner commented:
“UK house prices decline pushed the annual pace of price growth down to -2.6%, from -1.5% in June - the weakest outturn since August 2009.”
“The weaker price trend observed in recent quarters is unsurprising, given the disappointing performance of the wider economy. Data released last week revealed that the UK recession intensified in the three months to July, with the economy contracting by 0.7% quarter on quarter.”
“Against this difficult economic backdrop, it could be argued that UK house prices have shown resilience. While prices are currently 13% below their 2007 peak, this is less than the declines seen in a number of other economies that have experienced similar or more robust economic recoveries.”
Support for property market
At the beginning of July, the Monetary Policy Committee revealed their plans to pump £50bn into the economy by purchasing government bonds. The Bank of England also launch the ‘Funding for Lending’ scheme today which it is hoped will help households acquire credit by guaranteeing availability and lowering cost. It is hoped that both of these will help to boost the property market.
The Nationwide report explicated the effects that the EU debt crisis may have on the property market, concluding:
“With the Eurozone situation deteriorating again in recent weeks and few signs of a recovery in domestic demand, we continue to expect only a modest recovery in the quarters ahead, both for the UK economy and the housing market.”