Hidden behind today’s gushing Olympic headlines lies more disappointing economic news. Nationwide’s latest House Price Index release today shows that house prices are continuing to fall, with a 0.7 per cent decline in July. As the graph below shows, the fall in prices is a continuation of a trend that began when the country re-entered recession earlier this year:
The latest figures put prices down 13 per cent on their 2007 peak and 2.6 per cent lower than this time last year. Last year the average house price was £168,731: now it is £164,389. But if you look at these trends in an international context, Britain’s prices appear relatively resilient. From its high in 2007, the United States has seen a 15 per cent drop, while prices in Spain have plummeted by 25 per cent.
But the fall is worrying, especially when a Reuters poll of economists predicted a much smaller drop. Nationwide’s chief economist Robert Gardner puts the issues down to worsening economic conditions faced here and internationally. He does suggest that a change of fortunes might not be far off, thanks to the latest stimulus package and an ‘Olympics-related boost in Q3’. But yesterday’s reports that London is turning into a ‘ghost town’ during the Games suggest this boost may not be as impressive as the Treasury might hope.
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