Yesterday, we had the Nationwide report that house prices fell by 2.5 percent. Of course, that is a nominal decline. In many respects, it is more interesting to look at the change in house prices adjusted for inflation.
Since last summer, real house prices have fallen by almost 11 percent. Here the comparision with the US slump is revealing. The latest S&P/Case-Shiller national house-price index, published this week, showed a nominal price slump of 14.1 percent over the past year. In real terms, US property prices have fallen by a staggering 18 percent over the past year. By the middle of this year, the UK market could easily match that figure.
(data: RPI data for May is not yet available. I projected May inflation by assuming that prices would grow at the same rate as April.)