Figures from the Nationwide House Price Index have shown that house prices have dropped by 2.6% since last year making it the biggest decline since 2009.
House prices continue to fluctuate each month both increasing and decreasing, however people are still buying despite the changeable prices.
House prices also fell by 0.7% in July highlighting a fourth decline in five months for properties in the UK. For June an average price of a property stood at £165,738 compared to July which saw prices drop to £164,389.
Nationwide have predicted a modest recovery over the next few months with many lenders now offering schemes to help potential buyers. A positive outlook from the figures is that the UK economy is looking better as a result of the UK labour market and the high demand of homes that is needed compared to other countries such as the US and Spain.
Housing experts have warned that the demand in houses needs to be adequately supported or the UK economy will suffer which will lead to property prices being affected.
Nationwide chief economist Robert Gardner commented on the figures: “The weaker price trend observed in recent quarters is unsurprising, given the disappointing performance of the wider economy. Data released last week revealed that the UK recession intensified in the three month to July, with the economy contracting by 0.7% quarter on quarter.
“This disappointing outturn can be only partly explained by unusually wet weather and the impact of an extra bank holiday during the quarter.
“Indeed, the UK economy has contracted by 1.4% over the past nine months, and is now 4.5 percentage points smaller than it was in Q1 2008.”
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By Amanda Bainbridge