House prices fell at their fastest annual rate for nearly three years last month, the latest survey from Nationwide building society showed this morning.
Prices have now declined in four of the past five months, the Swindon-based lender said.
The fall of 0.7% in July means prices are now 2.6% lower than they were a year ago, at an average of £164,389.
Figures on Monday suggested the housing market is heading for a new downturn with new mortgage approvals at their lowest since 2010.
Nationwide chief economist Robert Gardner said: “The weaker price trend observed in recent quarters is unsurprising, given the disappointing performance of the wider economy.”
Nationwide added that house prices and the rest of the economy are only likely to recover modestly in the coming quarters as the benefits of the latest Bank of England stimulus and Government help for first-time buyers would be hit by the eurozone crisis.
However, UK house prices have not declined as fast as those in the US and parts of Europe, Nationwide said – probably due to the relatively small rise in British unemployment.
