House prices 'largest ever quarterly fall'

House prices have seen their largest ever quarterly fall in value in the last three months, according to figures today from building society Nationwide.

The firm said prices fell by 3.7% in the three months to June, on the previous three months, the biggest quarterly fall since the company started collecting the data in 1991.

House prices have now fallen for the seventh months in a row according to Nationwide, having lost an average of £13,500 from their peak last October.

The firm said prices fell 0.9% in June, representing a drop of 6.3% in the last year..

However, the figures did show prices fell by less in June than in the previous two months, with the 0.9% fall compared to the 2.5% drop seen in May, when mortgage lenders first started drastically tightening their lending criteria.

Fionnuala Earley, Nationwide's chief economist, said the change would add to pressure for the Bank of England to lower interest rates, with transaction levels now at historic lows.

Earley said: “The tightening of credit conditions over previous months along with changing expectations of house price growth and a general weakening in consumer confidence have hit mortgage demand and led to a severe slowing in the levels of housing market activity.

“The level of transactions is a key driver of house prices. Changes in transaction levels are a good indication of the likely path of prices and across housing cycles have tended to lead changes in house prices by a few months.”