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House price drop 'wipes out gains'

The gains observed in property values during the past year have been largely wiped out by the recent decline in prices, according to Nationwide.

The group has released figures which show that the average house price dropped by a further 0.3 per cent in November, following a slide of 0.7 per cent during the previous month.

Activity in the housing market remained subdued, leaving the typical house costing £163,398.

This is just 0.4 per cent higher than a year ago, after each of the last six months saw prices either fall or remain unchanged.

Earlier this week, the Bank of England reported a further fall in mortgage approval rates, and the figures from Nationwide are likely to add to fears among economists that house prices will suffer a double-digit drop next year.

But Nationwide said the rate at which house prices were falling was unlikely to accelerate, and predicted that prices would be supported over the coming months by an anticipated fall in the number of people putting their homes on the market.

The group also pointed out that its quarter-on-quarter index, which is generally seen as a smoother indicator of market trends, actually improved slightly during the month.

House prices fell by 1.3 per cent during the three months to the end of November, compared with a 1.5 per cent slide during the previous three-month period.

Nationwide's chief economist Martin Gahbauer said: "There is little evidence to suggest that house price declines are likely to accelerate in the months ahead.

"Much of the weakness in property values since the spring has been driven by a return of sellers to the market, following unusually low levels of property for sale in 2009 and early 2010."

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