House prices suffered an unexpected fall last month, dropping at their fastest pace since October last year, data from mortgage lender Nationwide showed on Thursday, reinforcing the subdued outlook for the property market.
Nationwide said that house prices fell by 0.6 per cent in August, reversing a revised 0.3 per cent rise in July, and remained 0.4 per cent lower than a year ago. Economists polled by Reuters had forecast that prices would be flat on the month, giving a 0.4 per cent annual rise.
"Sluggish demand for homes, combined with only a gradual rise in the supply of available properties, has helped to keep property prices stable since last summer," said Nationwide's chief economist Robert Gardner.
"Against this backdrop we continue to expect house prices to move sideways, or drift modestly lower over the remainder of 2011, although we recognise that the downside risks have increased," he added.
Bank of England data out on Tuesday also reinforced the gloomy trend in the property market. Although in July lenders approved the highest number of mortgages since May 2010, that was still well below levels seen before the 2008 financial crisis.
City A.M. Reporter