The seasonally adjusted UK house price index was 322.9 points in July – a fall of 0.7 per cent compared to June, according to figures released by Nationwide. This represents a year-on-year decline of 2.6 per cent.
The average UK house price (seasonally unadjusted) was £164,389 (June: £165,738).
In early July, the monetary policy committee announced that it would pump another £50bn into the financial system by purchasing government bonds. Nationwide said that the additional stimulus measures announced by the UK government and the Bank of England should provide much needed support for the economy and the housing market in the months ahead.
Robert Gardner, chief economist at Nationwide, said:
UK house prices declined for the fourth time in five months in July, with prices falling by 0.7 per cent. This pushed the annual pace of price growth down to -2.6 per cent, from -1.5 per cent 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 per cent quarter on quarter. This disappointing outturn can be only partly explained by unusually wet weather and the impact of an extra bank holiday during the quarter. Indeed, the UK economy has contracted by 1.4 per cent over the past nine months, and is now 4.5 percentage points smaller than it was in Q1 2008.
Against this difficult economic backdrop, it could be argued that UK house prices have shown resilience. While prices are currently 13 per cent 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.
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