House prices fell by 0.9% in June, less than half the rate they fell in May, says the latest survey from Nationwide, which puts the average price now at £172,415. House prices are also still 4% higher than they were two years ago and 9% higher than three years back, points out the lender.

‘The tightening of credit conditions over previous months along with changing expectations of house price growth and a general weakening in consumer confidence in the economy have hit mortgage demand and led to a severe slowing in the levels of housing market activity,’ says the report. ‘The latest data from the Bank of England shows house purchase approvals fell sharply in May, to 42,000 down from 58,000 the previous month.’

Transaction levels are they key to movement in the market, the report states, and first-time buyers are actually making up a respectable section of the overall number taking place: ‘Perhaps surprisingly given the poor affordability conditions, first-time buyers activity as a proportion of overall house purchase completions has held up fairly well,’ the report says.

‘First-time buyers accounted for about one third of house purchase transactions in the first quarter of the year, exactly in line with the average over the last three years. However, movers’ activity fell back further.  Movers accounted for about half of all house purchases in the first quarter, below the 55% average of the last three years.’

Looking ahead, Nationwide sees no miracle correction in the coming months. Chief economist Fionnuala Earley said: ‘With house purchase transactions so far below their long term trend it seems unlikely that there will be any rapid turnaround in housing market fortunes in the coming months. However, as prices continue to fall affordability measures become more favourable for those in a well financed position to be able to buy.’