House prices continue to fall

House prices in the UK have now fallen for 11 consecutive months, with a fall of 1.7% in asking prices reported in September, according to the Nationwide.

Asking prices have now seen an annual drop of 12.4%, leaving the price tag of the average UK home down to £161,797, more than £20,000 less than a year ago.

Nationwide added that while pace of house price falls had stabilised, the next year or two would be “difficult”.

- The price of a typical house fell by 1.7% in September
- Market weakness not surprising given ongoing turmoil and many risks remain
- House prices will continue to fall in short term, but longer term prospects are more sound

Commenting on the figures Fionnuala Earley, Nationwide’s Chief Economist, said: “House prices fell by 1.7% in September. This brings the price of a typical house in the UK to £161,797, 12.4% less than at this time last year. House prices have now fallen for eleven consecutive months, but the monthly rate of fall has been almost unchanged in the last three months.

The less volatile three-month-on-three month series has also barely changed for the last three months, after accelerating in the first half of the year. This may suggest the beginning of some stabilisation in the pace of house price falls.”

Ms Earley added: “Casting back one year there have been some astonishing and unpredictable developments in the housing and financial markets. In September 2007 the credit crunch had just begun, house prices were rising at an annual rate of 9.0%, the number of house purchase approvals per month was averaging at around its long term trend, almost 40% of first-time buyers were borrowing over 90% and the Bank Rate was at 5.75%, but with many expecting it to increase to 6%.

The situation in September 2008 could hardly be more different. House prices are falling, activity has contracted sharply, fewer than 20% of first-time buyers are borrowing above 90%, and the Bank Rate
has fallen to 5% and is expected to fall to 3.5% by the end of 2009.”