The price of a typical property in the UK dropped 0.5 percent this month, as demand from homebuyers remained subdued. This means that the annual house price inflation also declined 6.6 percent from 8.7 percent in June.
The average price of a UK home is £169,347 compared with £170,111 last month, and the number of properties sold in the UK is still low compared with the levels seen before the economic recession.
“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. Many potential buyers still lack the confidence to purchase their first home or trade up when faced with uncertainty over future income and employment prospects,” said Martin Gahbauer, chief economist at Nationwide.
Meanwhile, gross lending mortgage also fell 4 percent in June, and the number of home loan approvals for both home purchases and refinances were lower than in June last year, according to figures released by the Bank of England.
“This low demand is being driven both by the lack of demand among those existing borrowers enjoying low rates, and tighter criteria that may be constraining those borrowers who do wish to remortgage,” said CML economist, Paul Samter.
Simon Rubinsohn, chief economist at the Royal Institute of Chartered Surveyors (RICS), said the falls in mortgage lending and the decline of home values will remain flat for the rest of 2010, although there will be regional differences in performance.
“Significantly, all the key forward looking indicators compiled by RICS suggest the headline price indices will continue to slip back during the second half of the year. As a result, our expectation continues to be that the annual rate of house price growth in the Nationwide index will be around 2 percent in the final quarter of 2010 compared with 6.6 percent at present and a recent high of 10.5 percent in April. Within this overall trend, however, there will be significant regional divergences – with London, the South East and Scotland showing the greatest level of resilience,” said Mr. Rubinsohn.