The report revealed that house prices fell 0.2 per cent in June with the average price now £157,791. It also showed that the annual rate of house price growth in the UK is at its lowest since July 1996.
According to the figures, activity levels have also stagnated with buyers and sellers reaching stalemate while consumer confidence in their financial situation has weakened.
Fionnuala Earley, Nationwide’s group economist, said: “The future path of interest rates is at the top of the agenda. The dilemma the Monetary Policy Committee (MPC) faces is that if it reduces rates now it could encourage further borrowing, which is precisely the reason why it felt the need to increase rates last year. But if it doesn’t, it risks a more protracted slowdown and all that that brings with it.
“The recent Hometrack survey for June noted that despite the price falls, activity in the market is still increasing, albeit at a slower rate than May. Sales agreed have risen 3.5 per cent compared with 7.6 per cent last month, which is explained by a fall in buyers coming onto the market of 0.1 per cent.
“With fewer buyers and a continued increase in properties available, the oversupply means prices will inevitably decrease again in the coming months.”
John Wriglesworth, Hometrack’s housing economist, said: “The only good news is an upward trend in sales agreed and a general expectation of lower interest rates before the end of the year. These should help boost confidence and ensure price stability.
“We expect house prices to continue to bump along the higher plateau after the coming months. While the housing market is stagnating, it is showing absolutely no evidence of crashing. All talk of a pending housing recession is total clap-trap.”
