Nationwide prices fall

House prices fell for the second month running according to the Nationwide house price index which reported a 0.9% drop last month. This follows a 0.5% decrease in July.

The average cost of a home now stands at £169,347.

Martin Gahbauer, chief economist at Nationwide said: “As more sellers have returned to the market, buyers have a greater selection of properties to choose from and more bargaining power with which to bid down asking prices.”

The latest fall raises fears of a 'double dip' in houses prices.

Ed Stansfield, chief property economist at Capital Economics, said: “The rebound in house prices lacked any firm foundation.

“Judging the speed with which the second leg of the correction will unfold is difficult. If interest rates are kept at current levels for the foreseeable future, that will help to mitigate the impact of renewed rises in unemployment and the squeeze on household incomes stemming from the tightening in fiscal policy.

“On the other hand, if house price expectations take a turn for the worse, or if mortgage credit conditions tighten further, that would tend to increase the pace at which house prices move back to more sustainable levels.”