House prices 'cool' with a drop of 0.2%


House prices have fallen for the first time in 17 months, new figures from Nationwide have revealed, with some housing market commentators claiming it is evidence the market is "cooling".

The average price of a home in the UK fell by 0.2% in September according to the lender's latest data, with the average property price now standing at £188,374 - down from £189,306 in August.

The fall puts an end to 16 months of consecutive growth in the housing market, with the building society expecting the market to slow even further over the next three months, with demand beginning to moderate.

However, Nationwide also highlighted the huge regional differences in prices, with prices in London now at a record high of £401,072 - 31% higher than their 2007 peak, while prices in the UK as a whole are around 2% higher than in 2007.

St Albans saw the biggest rise, with prices up 24% compared to a year ago, with the average property price standing at £479,497, followed by Cambridge (up 21% in the last year, to £423,904), Belfast (up 21% to £188,240) and Reading (up 18%, £310,705).

Newcastle saw the smallest growth of just 4% in the last year, meaning the average house price there is £182,506.

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Robust demand

Robert Gardner, Nationwide's chief economist, said: "Price growth may soften further in the final quarter of the year. However, the outlook remains uncertain. There have been tentative signs from surveyors and estate agents that buyer demand may be starting to moderate, but the low level of interest rates and strong labour market suggest that underlying demand is likely to remain robust."

Alex Gosling, managing director of online estate agent, added: "It's official - the market is cooling. September is typically a busier month for buyer activity than August and yet prices have fallen. But there's no need to press the panic button just yet."

David Newnes, director of Reeds Rains and Your Move estate agents, said lending to first-time buyers and the Help To Buy scheme remain "vital tools to keep first-time buyers active in areas of the country where the recovery is vulnerable".

First-time buyers could also be boosted by recent news from the Conservative Party Conference, when Prime Minister David Cameron said that first-time buyers will be able to buy a new-build home for 20% less than the market price if the Tories win the General Election in May. He said 100,000 new homes will be built on brownfield land in England and they will be made available at the discounted rate to first timers under the age of 40.