Nationwide Reports Biggest Property Plunge in 3 Years

The start of any new month brings a fresh batch of property statistics and first out of the blocks are the Nationwide with claims of significant falls in house prices. In fact, the Society reports that property figures are falling at their fastest rate since 2009 and the trend looks set to continue for the remainder of 2012 at least.

Nationwide’s survey reveals that the average price of a home in Great Britain now stands at £164,389, a fall of over £1,000 from the June figure of £165,738. That represents a drop in percentage terms of 0.7% and this is the fourth month out of the last five that overall property prices have decreased.

It was also reported that mortgage approvals were at their lowest point since 2010 and Nationwide claim that the gloomy picture is firmly down to the current recession.

“The weaker price trend observed in recent quarters is unsurprising, given the disappointing performance of the wider economy,” said Robert Gardner, Nationwide’s Chief Economist.

“The UK recession intensified in the three months to July, with the economy contracting by 0.7% quarter on quarter.”

The Society also went on to point the finger at contributory factors such as the wet summer and the Queen’s Diamond Jubilee, but suggested that these were only minor issues and shouldn’t be blamed in isolation.

“This disappointing outturn can be only partly explained by unusually wet weather and the impact of an extra bank holiday during the quarter,” Mr Gardner added.

Elsewhere, property experts have met the news with resigned acceptance while it is forecast that property prices could ultimately end up falling by as much as 3%.

“The soft news on the housing market is coming pretty thick and fast at the moment,” said Howard Archer of IHS Global Insight.

“The Nationwide data reinforce our belief that house prices are headed lower over the rest of 2012 and very possibly beyond in the face of limited activity, low and fragile consumer confidence, muted earnings growth and relatively high unemployment.

“We expect house prices to end up losing at least 3% from current levels.”

Nationwide have also been in the news recently for releasing what some are heralding as the ‘cheapest ever mortgage deal’. After HSBC introduced a fixed rate product of 2.99% in July, Nationwide went on to trump this with a 2.95% deal.

However, the qualify criteria for both products is very strict and as such, neither are likely to kick start the mortgage approval market on their own. In turn, property prices could be set to maintain their downward spiral for some time to come.