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House prices 'continue to slide' House prices 'continue to slide'
(20 minutes later)
The slump in house prices continued in January with prices falling by 1.3%, according to the Nationwide, the UK's largest building society.The slump in house prices continued in January with prices falling by 1.3%, according to the Nationwide, the UK's largest building society.
The mortgage lender said the rate of price falls had eased slightly when compared with December's 2.5% fall. The mortgage lender said the rate of price falls had eased slightly when compared with December's 2.5% slide.
But the fall took the annual rate of decline in house prices to 16.6%, from a rate of 15.9% in December.But the fall took the annual rate of decline in house prices to 16.6%, from a rate of 15.9% in December.
Amid rising unemployment, job security worries were likely to be putting people off buying new home, it said. Amid rising unemployment, job security worries were likely to be putting people off buying a new home, it said.
The average house now costs £150,501, down from £153,048 a month ago. The average house now costs £150,501, down from £153,048 a month ago and £35,543 below the peak of October 2007.
'Hesitant'
"The deepening economic recession and financial market turbulence continued to weigh on housing market sentiment and activity," said Nationwide's senior economist, Martin Gahbauer."The deepening economic recession and financial market turbulence continued to weigh on housing market sentiment and activity," said Nationwide's senior economist, Martin Gahbauer.
The housing market was unlikely to improve until the economy stops shrinking, the lender added. "While the fall in house prices and the parallel reduction in interest rates has probably made many households curious about what is currently available in the market, many are likely to be hesitant to commit in a recessionary environment of rising unemployment and increasing uncertainty about future incomes."
Continued restrictions of credit was reducing the amount of people taking out mortgages, it said. Though the number of enquiries from would-be buyers was "recovering quite strongly", this was not translating into mortgage approvals, Mr Gahbauer added.
Nationwide said the housing market was unlikely to improve until the economy stopped shrinking, with continued restrictions of credit reducing the amount of people taking out mortgages.
The UK economy is now deemed to be in recession having recorded two consecutive quarters of negative growth.
The Bank of England has been cutting the Bank Rate sharply in recent months in an effort to stimulate the economy.
However, while there was "little prospect for noticeable improvement in the short term", historically it took time for interest rate cuts to filter through to the wider economy, Nationwide said.