The price of a typical house is worth 1% less today than it was a year ago, representing the first annual dip in the market since 1996.
According to Nationwide Building Society, the average home was worth £180,314 in April 2007, but following six consecutive months of falling prices - culminating in a 1.1% drop in April – the figure now stands at £178,555, a fall of £1,759.
The decline has been brought about by a combination of poor affordability and tighter financial market conditions, says Nationwide Chief Economist Fionnuala Earley.
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Mortgage approvals tumbling
“The latest fall in house prices follows from the steep decline in house purchase transactions over the last half year.”
“As a result of falling demand from first-time buyers, higher mortgage rates and tighter lending criteria, the number of mortgages approved for house purchases has fallen to record lows,” says Earley.
According to the Bank of England, mortgage approvals are actually at their lowest levels since the Bank began compiling data fifteen years ago.
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Prices could fall further
With the difficult conditions showing no sign of abating, some analysts feel the worst could be yet to come for house prices.
David Blanchflower, who is one of the nine Monetary Policy Committee members who set the bank's interest rates, has predicted a fall of up to 30% in the next two years, and called for further interest rates to help prevent this.
The Bank of England has already cut rates on three occasions in recent months - from 5.75% down to 5% - in the hopes of driving down mortgage costs and thus increasing affordability.
But these have so far failed to have the desired effect. In fact, mortgage rates have actually risen by over 1% over that period.
Average UK house price shift
| April 2008 | March 2008 |
| Monthly change | -1.1% | -0.7% |
| Annual change | -1.0% | 1.1% |
| Average price | £178,555 | £179,110 |
Figures from Nationwide
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