LONDON (ShareCast) - House prices have tumbled 10.5% in the past year, the first double digit fall since the fourth quarter of 1990, according to the Nationwide.

A 1.9% slide in prices during August took the average cost of a home down to £164,654. That followed a 1.5% drop the month before.

“House builders report that a lack of confidence in the market is the biggest reason behind the drop off in demand, although changes in lending criteria are also reported as an issue,” said Nationwide's chief economist Fionnuala Earley.

Taylor Wimpey reported a massive £1.54bn loss for the six months to June yesterday following huge write-downs on its land banks and the value of its George Wimpey brand.

“The ratio of sales to stocks has been a good predictor of movement in house prices,” added Earley. “Current movements suggest that the increased supply of properties on agents’ books will continue to act as a dampener to house price growth in the short term.”

She said although there’s still a great deal of uncertainty, the Nationwide expect the next move in interest rates to be down.

“But the extent to which this will revive the mortgage and housing market is likely to be limited while overall confidence in economic and housing market conditions is low.”

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