Average house price falls £8000
The average price of a home in Britain has fallen by £8,000 over the past year, marking the longest and steepest decline in the property market since the crash of the early 1990s, the Nationwide Building Society said yesterday.
In its monthly snapshot, the Nationwide said the traditional spring buying season had been marked by an acceleration in the pace of price falls. The 2.5% drop in May was the biggest since the society began publishing data in 1991 and took the annual fall to 4.4% - a rate not seen since the aftermath of Black Wednesday in 1992.
Fionnuala Earley, Nationwide's chief economist, said: "It was a big fall. There has been a change of sentiment, and although we would caution about reading too much into one figure, weaker underlying factors are affecting the housing market."
This month's sharp drop in house prices was the seventh successive fall recorded by the mortgage lender and the longest run of declines since 1992.
Earley said weakening consumer confidence, the rationing of credit, refusal by some lenders to pass on cuts in interest rates, and political unrest following the row over the 10p tax band loss had all affected the market.
City analysts said the 7% decline in house prices since the start of the year was the start of a correction in the property market that was likely to persist for the next two years.
Seema Shah, of Capital Economics, said: "The data show that the pace of house price falls is accelerating, suggesting that this housing market downturn is looking likely to be just as bad as, if not worse than, the early 1990s slump. Our forecast for a 20% decline in house prices by the end of 2009 is firmly on track."
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