UK house prices fell in July

It has today been revealed, via the Nationwide property survey, but UK house prices fell by 0.5% in July bringing the annual rate of house price inflation down from 8.7% last month to 6.6% to the year ended July. The cost of a property in the UK has now fallen to around £170,000 and there are some doomsday predictions in the marketplace regarding the UK property market in the medium term.

As we have discussed on numerous occasions there is a real danger that the UK financial press could actually be exacerbating a problem which is beginning to grow. There have been concerns about the fragile recovery in the UK property market for some time that many people believed that while 2010 would be difficult, 2011 would perhaps be a year of stability. However, this does not look like being the case!

There are some doomsday forecasts in the markets suggesting that UK property prices could fall by 25% over the next five years which would decimate the UK economy. Whether we like it or not, the UK economy is based upon property purely and simply because consumers on the whole have the vast majority of their private wealth tied up in the property market. Concerns about mortgages, property values and the ability to buy and sell property in the UK will have a detrimental impact on the UK economy.