House prices fall 1.1 per cent in April
Weakness in the property market stretched into April with house prices dropping by 1.1 per cent this month, the Nationwide House Price Index found.
The drop represents the first year-on-year fall in prices since March 1996 and brings the price of a typical house down to £178,555, £1,759 lower than at the same time last year.
April's fall in prices continues the trend of the last six months and reflects the weakening sentiment in the market brought about by poor affordability and tighter financial market conditions. (See previous house price index.)
Fionnuala Earley, Nationwide's chief economist, said: "With house prices no longer rising, consumers are likely to become more cautious in their spending habits, contributing to a weakening of the overall economy.
"As the economy slows, inflationary pressures should moderate over time and allow the Bank of England to make additional interest rate cuts.
"However, the risk that the current strength of oil and food prices could feed into wages means that the Monetary Policy Committee (MPC) will probably prefer to cut rates at a more gradual pace than homeowners might prefer."
Following the release of the Nationwide report, Peter Bolton King, chief executive of the National Association of Estate Agents (NAEA), called for calm in the market and said the drop was tiny and needed to be put in context.
“We have been experiencing huge price leaps of double percentage points in the housing market in recent years so overall a 1 per cent drop is a tiny proportion of the rise and certainly not enough to throw many people into negative equity the way we saw it in the early ‘90s,” King said.
