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Compared with July last year, the average house price was down
3.8% after a 3.5% annual fall in June, Nationwide said.
The reading was in line with the consensus from a Reuters poll
of economists.
House prices fell 0.2% month-on-month, Nationwide said.
The survey chimed with other gauges of the housing market that
point to weak activity caused by rising interest rates which
have pushed mortgage rates above 6% for home buyers and existing
mortgagors looking to refinance.
Nationwide chief economist Robert Gardner said the typical
first-time buyer with a deposit of 20% would see mortgage
payments at current rates account for 43% of their take-home pay
- up from 32% a year ago.
"This challenging affordability picture helps to explain why
housing market activity has been subdued in recent months,"
Gardner said.
The Bank of England looks on course to raise its Bank Rate to
5.25% from 5.0% on Thursday, according to economists polled by
Reuters, which would mark the highest cost of borrowing since
2008.
BoE data on Monday showed a surprise jump in mortgage approvals
in June, although most economists think a downturn in the
housing market has further to run - with the bulk of the BoE's
rate hikes since late 2021 yet to feed into the economy.
Still, Gardner said a relatively soft landing for the housing
market was achievable.
"While activity is likely to remain subdued in the near term,
healthy rates of nominal income growth, together with modestly
lower house prices, should help to improve housing affordability
over time - especially if mortgage rates moderate once Bank Rate
peaks," Gardner said.
(Reporting by Andy Bruce; Editing by Kate Holton)
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