By Marcus Leach
Nationwide's House Price Index has revealed that house prices in the UK fell marginally in August, with the downward trend expected to continue until the end of the year.
House prices declined by 0.6% in August, according to Nationwide's data, and in comparison to a year ago the price of a typical home in August is 0.4% lower.
The typical home now costs £165,914, the lender said, adding that prices could drop further if the current economic trend continues.
“UK house prices declined by 0.6% in August, although this doesn’t change the picture of relative stability that has characterised the market over the past twelve months. Indeed, prices were broadly unchanged compared with August 2010 — just 0.4% lower," Robert Gardner, Nationwide's Chief Economist, said.
“Sluggish demand for homes, combined with only a gradual rise in the supply of available properties, has helped to keep property prices stable since last summer. We expect this trend to be maintained over the remainder of 2011, although downside risks have increased as UK and global growth prospects have weakened.
“The major risk for the housing market is that weak economic growth could lead to a further deterioration in the labour market.
“UK firms laid off far fewer workers in the wake of the 2008 recession than in previous downturns, even though it was one of the deepest and longest recessions on record (see chart below). This was partly due to greater flexibility in the UK labour market, which held back wage growth, and allowed for reduced hours and a shift toward part-time and temporary workers, cushioning employment from the impact of weaker demand."
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