House prices fall at fastest rate since 2009

House prices fell in August at their fastest annual rate for 14 years, according to Nationwide.

The building society’s latest index shows average prices are 5.3% lower than they were in the same month last year. The drop, which followed a 3.8% annual drop in July, is the biggest since July 2009.

The fall came as prices in August dropped 0.8% on the previous month, with an average price of £259,153.

Robert Gardner, chief economist at Nationwide, said the softening in prices is “not surprising” given the rise in borrowing costs in recent months.

Gardner also pointed to figures based on HMRC and lenders’ estimates showing housing transactions in the first half of this year are 20% below pre-pandemic levels.

The Nationwide figures follow other data recently suggesting falling prices and slowing transactions. Rightmove last week published figures showing asking prices have fallen at their fastest rate for five years, while Zoopla has predicted a 20% fall in sales this year.

However, Gardner said: “A relatively soft landing is still achievable, providing broader economic conditions evolve in line with our expectations.

“In particular, unemployment is expected to remain low and the vast majority of existing borrowers should be able to weather the impact of higher borrowing costs, given the high proportion on fixed rates, and where affordability testing should ensure that those needing to refinance can afford the higher payments.”