A Nationwide Housing Market bulletin reports that house prices have fallen by a seasonally adjusted 0.2 % m/m in June, broadly reversing May?s rise. The fall was sufficient to take the annual rate of house price inflation down to just 4.1%, its lowest level since July 1996. Although prices rose by 1.2 % in the second quarter, Nationwide attributes this to an early Easter which artificially boosted April?s house prices.

House price inflation dropped into single digits in all regions except Northern Ireland and Scotland. In the previous quarter house price inflation had been 10% or more in eight of the 13 regions. In 10 of London?s boroughs the annual rate of house price inflation has turned negative and in three Boroughs prices are at least 5% lower than this time last year.

With little evidence that housing market confidence or activity levels are growing, it is likely that the situation will stay like this for a while, resulting in a perceivable downward trend in the second half of this year and possibly through 2006.