House prices fell again in August and by rather more than expected. A 0.8 percent monthly decline was the third drop in the last four months and matched the steepest since last November. It was also more than double the market consensus. Annual inflation eased to minus 5.3 percent from minus 3.8 percent, the weakest outturn since July 2009. However, the Nationwide still believes that a relatively soft landing remains achievable, particularly should unemployment remain low.

Market momentum has slowed markedly in recent months on the back of rising mortgage rates and renting costs. Approvals were down almost 10 percent in July and many would-be buyers are now on hold. Prospective sellers are also waiting for conditions to improve so supply side factors remain broadly supportive but near-term at least, prices look likely to slide further.

In terms of the broader picture, today's update puts the UK's ECDI at minus 41 and the ECDI-P at minus 53, both measures showing a significant degree of underperformance that will add to the BoE MPC's policy dilemma later this month.

Prices are seen falling 0.3 percent on the month after 0.2 percent drop in July.

The Nationwide House Price Index (HPI) provides house price information derived from Nationwide lending data for properties at the post survey approval stage. Nationwide house prices are mix adjusted; that is, they track a representative house price over time rather than the simple average price.

Home values affect much in the economy especially the housing and consumer sectors. Periods of rising home values encourage new construction while periods of soft home prices can damp housing starts. Changes in home values play key roles in consumer spending and in consumer financial health. During the first half of this decade sharply rising home prices boosted how much home equity households held. In turn, this increased consumers' ability to spend, based on wealth effects and from being able to draw upon expanding home equity lines of credit.

Although the Nationwide data are calculated similar to the Halifax method Nationwide substantially updated their system in 1993 following the publication of the 1991 census data. These improvements mean that Nationwide's system is more robust to lower sample sizes because it better identifies and tracks representative house prices. Historically, the data go back to 1952 on a quarterly basis and 1991 on a monthly basis.

Over long periods the Halifax and Nationwide series of house prices tend to follow similar patterns. This stems from both Nationwide and Halifax using similar statistical techniques to produce their prices. Nationwide's average price differs because the representative property tracked is different in make up to that of Halifax.