The value of the average UK property fell by the largest amount yet this summer, Clear Property Investment has learned.

Mortgage lender Halifax's latest statistics showed house prices had fallen by 3.6 per cent or £6,000 in August.

The news has led many analysts to predict that thousands of home owners are about to experience negative equity where the value of the house is less than the mortgage they are paying. This will have a rebound effect on the housing market with many householders ‘stuck' in their current property and unable to move on.

Mortgage broker David Hollingworth, of London & Country said the figures had added to worries of a double-dip in the housing market.

Economist Paul Diggle of Capital Economics told the Telegraph newspaper: "The hefty drop in the Halifax measure of house prices adds weight to the view that house price weakness is far from over. To our minds, weak housing market activity indicators mean that further falls in house prices are likely.

"There is no doubt that this will reduce the amount of equity in people's homes, making it even harder to remortgage."

This comes at a time when mortgage lenders are increasing the amount needed for a mortgage to 25 per cent in many cases. Borrowers also need to have scrupulously clean credit histories to even be considered in the first place.

The Council of Mortgage Lenders (CML) warned that tough new regulations proposed by the Financial Services Authority were damaging and, had they been imposed just four years ago, would have meant around 3.8 million people being denied a mortgage.

In defence the FSA said its proposals were "designed to address the major failures that have occurred in the mortgage market and we are actively consulting with all stakeholders to ensure we get the right solution."

Halifax housing economist Martin Ellis said it was far too early to tell if it was the start of worse things to come for the housing market.

"Earnings growth is expected to be very modest over the next year," he said. "Tax rises are on the way and more people are putting their homes on the market. These will all be constraints on the market, ultimately dampening house prices."

For up-to-the-minute advice on property investing and the market please speak to any of our Clear Property Investment staff.

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