House price fall fuels fear of double-dip
FEARS of a sustained double-dip in Britain’s property market intensified yesterday after mortgage lender Nationwide reported that house prices fell this month for the first time since February and the Bank of England revealed that mortgage approvals dropped to a four-month low in June.
The latest figures from Nationwide showed that house prices fell by 0.5 per cent in July, echoing the falls in the Halifax index over the past three months. The decline cut the annual rate of house price inflation to 6.6 per cent from 8.7 per cent and the average price of a house to £169,347.
Martin Gahbauer, chief economist at Nationwide, said: “A combination of restrictive credit conditions and uncertainty about the future economic outlook continues to limit the pool of buyers to those with relatively large financial resources.”
But he warned: “It will take several more months to establish whether house prices are now simply oscillating around a flat price trend or whether a period of downward trending prices may be in store.”
Tight credit conditions have hampered the property market since the start of the financial crisis and the latest figures from the Bank of England show little sign of a substantial easing in lending.
The Bank of England reported that mortgage approvals dropped from 49,500 to 47,600 in June, only slightly above the average during the recession. Net mortgage lending totalled just £0.7bn on the month, one of the lowest outturns in the series’ history.
“Weak mortgage lending, as indicated by today’s data, could go some way to explaining the weakness we have seen in the housing market in recent months,” said Varun Bhabha at Barclays Capital.
Lucian Cook, director of Savills residential research, said: “This evidence all raises the question of price falls in the second half of the year and seems to have drawn some of the house price doomsters back out of the woodwork. Our view is that house prices will fall over the next six to nine months but the extent of those falls is likely to be capped by the fact that, for those able to access the market, mortgage affordability is high.”