Housing market sees controlled fall

According to the Nationwide, house prices fell a seasonally adjusted 0.2% in August, with the average cost of a home at £157,310. Annual price growth fell to 2.3% from 2.6% in July, the lowest level for nine years. However, in the three months to August prices increased by 0.3%.

Nationwide said that prices were experiencing a “continued controlled slowdown”. Fionnuala Earley, Nationwide group economist said: “In spite of a fair deal of bearish comment, the housing market has remained quite resilient this year following last year’s interest rate hikes”.

The figures were in line with recent surveys from the Office of the Deputy Prime Minister (ODPM) and the Land Registry, both of which recorded a decline in annual house price inflation from almost 20% a year ago to approximately 5%.

According to Ms Earley, monthly purchase approvals were increasing and estate agents had noticed a willingness among sellers to adjust prices. These factors, together with a reduction in interest rates, had led to increased numbers of buyer enquiries and increased optimism about sales from estate agents.

Ms Earley warned, however, that the affordability of houses was still an issue, particularly among first time buyers. She said she expected the market to continue to cool in a “controlled fashion”.

Ed Stansfield, an analyst at Capital Economics said the figures were “no surprise” and supported “long standing anecdotal evidence” of a market slowdown. He suggested that the fall in prices in London and the South East was likely to spread across the country.