Nationwide’s latest house price index revealed values fell for the second consecutive month in August, by 0.9% following a 0.5% drop in July. It said this correction was “not an unhealthy development” given that house prices had recovered faster than the wider economy.

However, 64% of Mortgage Solutions readers do not think further falls will help boost the mortgage market, while a significant minority of 36% do believe it would help.

David Hollingworth, head of communications at London & Country, said the issue depended on the time scales involved: “Falling house prices in the current fragile market will make people very hesitant about entering the sector.

“Over the long term, it could pave the way to recovery as affordability improves and opens up the market to first-time buyers. It doesn’t mean we have to have some great crash, just a slight decline or flat prices that allow incomes to catch up.”

Nevertheless, he pointed out that there are many factors that could still affect the market, such as public sector job cuts and added: “House prices are falling back because of improved supply, but the number of buyers is not keeping up. There is a lot of hesitancy out there.”

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