House prices tumbled for the eight month in a row in September, wiping more than £2,000 from the value of an average home, new figures from the Halifax show…
The average property price is now £172,108, down from about £200,000 in September last year. This 13.4 per cent annual fall is the largest decline since Halifax's series began in 1987. Prices in the three months to September were 12.4 per cent lower than in the same period last year, which is another record low.
This decline in prices has overtaken the 1990s housing market slump, when the longest run of house price falls was seven months.
The news will come as a blow to homeowners, millions of whom received a boost as the Bank of England cut interest rates by half a point to 4.5 per cent. Some 4.7 million householders have mortgages that are linked to the base rate or their lenders' standard variable rate. Yesterday's rate cut will knock hundreds of pounds off their annual mortgage bill.
Some experts said that the fact that the drop in prices in September was the most modest since March indicated that house price falls may be moderating.
Martin Ellis, Chief Economist at the Halifax, said: "The overall price decrease in the three months to September was very similar to that in the previous quarter, indicating that the trend rate of decline may be beginning to stabilise."
But economists said that there was more pain to come for homeowners.
Howard Archer, Chief Economist at Global Insight, said, "House prices seem poised to fall substantially further as the fundamentals remain largely negative, even though tracker mortgage rates have fallen following the Bank of England's 50 basis point interest rate cut.
Credit conditions remain extremely tight and this continues to exert upward pressure on many mortgage rates and limit the amount of mortgages available."
Seema Shah at Capital Economics, said, "The bottom line remains the same: house price falls still have much further to go."
Capital Economics is forecasting that prices will fall by 35 per cent from their peak in August last year.