UK house prices suffer biggest drop since 2009

British house prices fell at their fastest annual pace in nearly three years last month, data from mortgage lender Nationwide showed on Wednesday, as the effects of nine months of recession spread further across the economy.

Nationwide reported a 0.7 per cent decline in house prices in July. Prices are now 2.6 per cent lower than a year ago – their biggest annual fall since August 2009.

Britain’s economy entered recession at the end of last year, and shrank a larger-than-expected 0.7 per cent in the second quarter of 2012, as bad weather and an extra public holiday added to the effects of public spending cuts and the debt crisis in the euro zone.

House prices and the rest of the economy are only likely to recover modestly in the coming quarters, as the euro zone crisis would limit gains from more Bank of England stimulus and a government programme aimed at increasing mortgage and business lending, Nationwide added.

British house prices are now 13 per cent below their 2007 peak.

Source : Today – 1 Aug 2012

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