UK house prices fell by 0.9% on average last month, according to the latest survey from the Nationwide.

The decline was less severe than the record 2.5% fall seen in May, but prices were now 6.3% lower than a year ago, the Nationwide said.

The average home now costs £172,415 and is £13,629 cheaper than at the top of the market in October last year.

The Nationwide survey found that the housing market in Scotland had been more resilient than elsewhere.

Although prices in the three months to June had fallen in Scotland by 1.8% compared with the previous quarter, it was the only area to see an annual growth, up 0.6%.

Nationwide suggested that the sharp rise in oil prices had benefited regions such as Aberdeenshire.

It also pointed to the fact that prices did not shoot up as quickly during the housing boom.

Pace of change

The credit crunch and the resulting difficulty for many to get a good mortgage deal has led to many potential buyers staying put across the rest of the UK.

The sometimes volatile monthly figures showed that the pace of price falls had eased, down 0.9% in June whereas it had dropped 2.5% in May. It was the eighth consecutive monthly fall in prices.

The year-on-year change across the UK was down 6.3% in June compared with 4.4% in May.

The Bank of England this week said that mortgage approvals in the UK has slumped to 42,000 in May, a 28% fall compared with the previous month and 64% down on a year ago.

Nationwide said the lack of activity in the housing market was key to prices, but its analysis suggested it was movers, rather than first-time buyers who were staying put.

It said first-time buyers accounted for a third of transactions in the first three months of 2008, in line with the average over the previous three years.

Movers accounted for fewer than half of transactions in the same period, below the 55% average of the past three years.

See regional house price breakdown
The low transaction levels meant the trend with prices would continue, according to Nationwide’s chief economist Fionnuala Earley.

“It seems unlikely that there will be any rapid turnaround in housing market fortunes in the coming months,” she said.

“However, as prices continue to fall affordability measures become more favourable for those in a well-financed position to buy.”

Regional picture

The average home is £13,629 cheaper than at the price peak in October and £11,500 less than at the same time in 2007, but prices are still 4% higher than two years ago and 9% higher than three years ago.

BIGGEST ANNUAL RISE IN PRICES
Cambridge: 4% annual change, average price £316,548
Canterbury: +4%, £224,787
Oxford: +4%, £324,566
Carlisle: +3%, £153,512
Aberdeen: +3%, £225,124

Alongside the monthly survey, the Nationwide has released its quarterly figures on a more local level.

They showed the biggest annual price rises for the second quarter were to be found in the university cities of Cambridge, Canterbury and Oxford, followed by Carlisle and Aberdeen.

Twelve out of 13 areas of the UK witnessed year-on-year drops in house prices during the three months from April.

London – although still the most expensive – has fallen more in line with the rest of the UK owing to tighter controls on lending by banks, a squeeze on household finances and less secure job prospects in the City, according to Nationwide.

Scottish house prices have been “more resilient” but Northern Ireland has shown the biggest correction after sharp rises in 2006-7.

BIGGEST ANNUAL FALL IN PRICES
Sheffield: 17% annual fall, average price £168,321
Belfast: -11%, £268,174
Birmingham: -9%, £166,581
Manchester: -9%, £192,151
Coventry: -9%, £158,888

At a local level, the biggest falls in prices, year-on-year for the second quarter were in Sheffield, Belfast, Birmingham, Manchester and Coventry.

Ms Earley predicted that the next move in interest rates would be down, at some point before the end of the year owing to increased pressure on consumer spending and a slowing economy.

But Alan Clarke, UK economist at BNP Paribas, said: “There is virtually no light at the end of the tunnel for the housing market.”

Jeremy Leaf, of the Royal Institution of Chartered Surveyors, said that all the same reasons existed for people wanting to move home, but lenders were still uneasy about giving mortgages.

He was more optimistic than many as he said that the housing market was approaching the end of the downturn.

“There is a little bit of a glimmer that it is not getting as bad, as quickly, as three months ago,” he told the Today programme.

News reported by BBC

House prices in England and Wales were unchanged in May and up 1.8% over the year, the Land Registry says.

But it said that sales volumes during March were half of the number of March 2007, at 53,080.

The figures, which are based on completed property sales, come after sharp falls in house prices were reported by the UK’s major lenders.

The Registry said annual price growth fell for the ninth month running. The average cost of a home was £183,266.

Price changes

The data shows that London has the biggest year-on-year growth in property prices – up 6.9%.

There were also rises in prices in the East Midlands, the East, Yorkshire and Humber, the South East and the North West.

But average prices fell over the last 12 months in the North East, South West, Wales and the West Midlands.

At a more local level, Monmouthshire saw the highest annual price growth in May – at 6.9%, whereas in Ceredigion prices fell the most, by 7%.

Following the trend?

The figures painted a far more rosy picture for homeowners than lenders’ data for the whole of the UK during the same month.

A series of house price reports will be published in the coming days

The Land Registry figures are based on completed sales across all lenders, unlike Halifax and Nationwide surveys which are based on an earlier stage in the buying process – when the price is agreed after a survey by their mortgage customers.

According to Halifax, UK house prices dropped by 2.4% in May, which pushed prices 3.8% lower than a year before.

Halifax, which is Britain’s biggest mortgage lender, has since predicted that UK house prices would drop by 9% this year, a more severe fall than its previous forecast.

The Nationwide building society reported a 2.5% fall in house prices during May.

The surveys, and other research, all show a significant fall in the volume of house sales.

The Land Registry said there were an average of 61,950 transactions per month from December to March, down from the same period a year earlier when the average stood at 100,693.

The number of properties sold in England and Wales has dropped by about half from March 2007 to March 2008 across all price ranges.

This includes the £1m-plus bracket, with 646 luxury homes sold in March 2007, but 357 sold in March 2008.

Transactions have collapsed in the wake of the international credit crunch, as banks and other lenders found it very difficult to raise mortgage funds on the financial markets.

Earlier this week HM Revenue and Customs said the number of UK property sales had fallen by 32% this year.

News reported by BBC