House prices fall 14.6pc in a year

House prices have fallen for the twelfth month in a row and are now 14.6pc lower than last year, the latest figures from Nationwide show.

Houses for sale: house prices are falling by almost £80 a day, according to Nationwide
The average house price has dropped by £27,000 in the past year, says Nationwide Photo: PA

Prices fell 1.4pc in October and the average house has seen £27,000 wiped off its value in the past twelve months.

The number of completed housing sales has now fallen to its lowest level since the Nationwide series began in 1974, the building society added in its lastest House Price Survey, driving the decline in prices.

The crisis in the financial sector and the latest Government data suggesting a recession is imminent is likely to worsen the housing market slump and has “uncomfortable implications”, Nationwide said.

“A looming recession and continued financial market instability have uncomfortable implications for the housing and mortgage markets, and will undoubtedly affect the pace of recovery in house prices,” Fionnuala Earley, the Nationwide’s chief economist, said.

“However the speed of the economic slowdown and the determination on the part of central banks to return stability to the financial markets does mean that interest rates are likely to continue to be cut sharply which will make life easier for borrowers on variable rate loans and those coming to the end of fixed rate deals.

“The half percentage point reduction in October will not be the last rate cut of 2008 and the possibility of even deeper cuts this year is increasing as the Bank of England attempts to prevent a deep and prolonged recession. We believe rates will be cut by at least 50bp in the last two months of this year, but would not rule out larger moves, particularly if further co-ordinated action by central banks is warranted.”

By Graham Ruddick
Last Updated: 9:22AM GMT 30 Oct 2008

Source: The Telegraph

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