With consumer confidence shaky and the fear of job losses mount the number of new home owners is dropping. Rather than getting loaded down by a mortgage many are choosing to wait. Also the ability to obtain a mortgage has been hampered due to high deposit and stricter lending criteria. Add an influx of homes for sale to the market and home prices will drop.

The average home price fell 0.5 per cent in value to 169,347 pounds in the month from June to July according to figures from Nationwide Building Society. This means houses are losing a value of 25 pounds per day in pricing. Experts say prices will continue to drop. Some are forecasting an additional 20 per cent fall in prices.

A prediction from the National Institute of Economic and Social Research warned that house prices would fall 8 per cent in the next five years.

Martin Gahbauer, Nationwide’s chief economist said: "Restrictive credit conditions and uncertainty about the future economic outlook continues to limit the pool of buyers to those with relatively large financial resources.

"Many potential buyers still lack the confidence to purchase their first home or trade up when faced with uncertainty over income and employment prospects."

Remortgages are still being approved in good numbers, whereas new home mortgages have fallen every month for 2010.  While buyers are finding it hard to get approvals, the lending conditions will now be much worse for new buyers with the new proof of income regulations put in force by FSA.  This is definitely an economic environment in which home prices will continue to drop for awhile to come.