House prices fall by 0.7%
UK house prices have declined by a further 0.7 % in July, making it the fourth fall in five months, according to Nationwide's latest house price survey.
Prices are now 2.6% lower than a year ago.
Figures from the lender show that the average house price has fallen to £164,389 from £165,738 in June, showing the weakest outturn since August 2009.
Robert Gardner, chief economist at Nationwide, says: "The weaker price trend observed in recent quarters is unsurprising, given the disappointing performance of the wider economy. Data released last week revealed that the UK recession intensified in the three months to July, with the economy contracting by 0.7% quarter on quarter. This disappointing outturn can be only partly explained by unusually wet weather and the impact of an extra bank holiday during the quarter.
"Indeed, the UK economy has contracted by 1.4% over the past nine months, and is now 4.5 percentage points smaller than it was in [the first quarter of] 2008."
He adds: "Against this difficult economic backdrop, it could be argued that UK house prices have shown resilience. While prices are currently 13% below their 2007 peak, this is less than the declines seen in a number of other economies that have experienced similar or more robust economic recoveries."
Commenting on the Nationwide figures, Ashley Alexander, managing director of MeetMyAgent.co.uk, says the property market seems to be mirroring the economy.
"There is a far closer correlation between the two than there has been in the past," he says.
Alexander hopes the housing market will get a boost in the autumn following the end of the Olympics and today's launch of the Funding for Lending scheme, which will prompt banks and lenders to make more money available to homeowners and businesses.
"There are already signs of an improvement in mortgage rates, but we'll have to wait and see whether this will extend to higher loan-to-values.
"Even if there is a greater availability of credit, the question is whether there is the demand for this credit. Consumers remain very cautious," he adds.