The housing market still shows no sign of long-term recovery with house prices falling last month.
The latest Nationwide survey shows that British property prices fell by 0.9% in August and, following on from a 0.5% drop in July, it represents the first time that prices have fallen for two consecutive months since February 2009.
The news comes just days after economists warned that the housing market could be heading for a double dip with thousands still stranded in negative equity after buying their property at the height of the boom in 2007. The Nationwide warns that unless prices recover substantially in September, the quarterly growth rate is likely to turn negative next month.
Martin Gahbauer, chief economist at Nationwide said: “Recent market trends remain consistent with an unwinding of the supply-demand imbalance that drove up prices for much of last year.” He added that since the rise in prices of last year were ahead of the recovery in the wider economy, “the current correction is not an unhealthy development”.
Economists are unsure how far house prices will fall with some expecting just a 3% to 5% drop though others predict a 25% drop before the end of 2012. Nationwide says in its latest figures that the average home in the UK currently costs £169,347.
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