House prices show biggest monthly drop for six years in August
HOUSE prices in the UK have recorded their biggest month-on-month dip in six years, according to an index.
Values fell by 0.5 per cent month on month in August, marking the biggest decline since July 2012, Nationwide Building Society said. In July, house prices had increased by 0.7 per cent month on month.
Annual house price growth softened to 2 per cent in August, compared with 2.5 per cent in July.
Across the UK, the average house price is now £214,745.
Nationwide chief economist Robert Gardner said that, despite the slower pace of annual house price growth, it remains within a fairly narrow range seen over the past 12 months of around 2 per cent to 3 per cent.
This suggests there is little change in the balance between demand and supply in the market, he said.
Mr Gardner continued: "Looking further ahead, much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates.
"Subdued economic activity and ongoing pressure on household budgets is likely to continue to exert a modest drag on house price growth and market activity this year, though borrowing costs are likely to remain low.
"Overall, we continue to expect house prices to rise by around 1 per cent over the course of 2018."
Howard Archer, chief economic adviser at EY Item Club, said the 0.5 per cent house price dip in August shows that previous increases seen in the months leading up to August were "a false dawn for house prices".
"We suspect that any meaningful housing market upturn will remain elusive over the coming months," he said.
"The fundamentals for house-buyers are likely to remain challenging - and they will not be helped by the Bank of England hiking interest rates from 0.5 per cent to 0.75 per cent in early August."