Market continues to soften as repossession threat looms large.
UK house price inflation slipped to a nine-year low in July, recording an annual gain of just 2.6 per cent, according to the Nationwide building society. It is the first time since May 1996 that property prices have increased at a lower rate than wages.
The price of an average home in Britain went up just 0.2 per cent in July, and is now £158, 348. Nationwide economist Fionnuala Earley said: "At this point in time we expect the path of house prices to continue to soften gently for some time. But the risk to this lies in the overall path of the economy."
Yesterday the government warned that the number of repossessions was close to a 12-year high for the second quarter of 2005 as more households struggled to cope with their debts. According to the Council of Mortgage Lenders, 4640 homes were repossessed in the first six months of 2005, a 51 per cent increase on the previous six-month period.