House prices fall less sharply in June

The latest house price figures from Nationwide reveal a 0.9% drop in June, less than half the decrease seen in May.

Prices are now 6.3% lower than this time last year, but are still 4% higher than two years ago. The average UK property is now £172,415.

Fionnuala Earley, Nationwide’s chief economist, said: “The level of transactions is a key driver of house prices. Changes in transaction levels are a good indication of the likely path of prices and across housing cycles have tended to lead changes in house prices by a few months.

“In the most recent cycle the number of house purchase approvals began to moderate in the first quarter of 2007, whereas annual house price growth did not begin to slow until the third quarter. The number of house purchase approvals per month is now at historic lows and in May was running at less than half of its long run average rate.

“Perhaps surprisingly given the poor affordability conditions, first-time buyer activity as a proportion of overall house purchase completions has held up fairly well. First-time buyers accounted for about one third of house purchase transactions in the first quarter of the year, exactly in line with the average over the last three years.

"However, movers’ activity fell back further. Movers accounted for about half of all house purchases in the first quarter, below the 55% average of the last three years. In contrast, estimates of buy to let house purchase activity held up very well. These purchases accounted for about 19% of house purchase completions in the first quarter – significantly more than the average over the last three years of 14%.

“With house purchase transactions so far below their long term trend it seems unlikely that there will be any rapid turnaround in housing market fortunes in the coming months. However, as prices continue to fall affordability measures become more favourable for those in a well financed position to be able to buy.”