Nationwide index shows prices fall 0.6%, the first drop since April

UK house prices have fallen for the first time since April amid uncertainty over the UK’s economic outlook according a Nationwide survey.

The Building Society’s House Price Index showed that house prices fell by 0.6% in August, and are 0.4% lower than the same time last year.

The average price of a UK home fell £2,817 from £168,731 to £165,914 over the month.

Robert Gardner, Nationwide’s chief economist, said that sluggish demand has helped keep house prices stable. “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.”

Gardner noted that the weak economic outlook in the UK and the slowdown in the US could dampen demand in the long term, but prices are expected to remain relatively stable.

“The UK economy grew by just 0.2% in the second quarter of the year – well below its long-term trend rate of around 0.7%,” Gardner said. “Indeed, despite being more than eighteen months into the recovery, UK activity is still around 4% below where it was at the end of 2007.”

Nationwide also said that house prices increased by 0.1% over the less volatile three-month measure, though this was lower than the 0.3% rise seen in the previous three months.

The Nationwide House Price index is based on the number of mortgages approved by the Building Society over the previous month.