Halifax: House prices drop 0.6%

House prices were down 0.6 per cent in September, seeing the average home in the UK worth £198,500.

That is according to the Halifax house price survey out today, which finds house prices were 10.7 per cent higher than in September 2006. This compares with 11.4 per cent for August 2006 to 2007.

Looking at the last three quarterly averages, Halifax notes September's figures show "a continuing steady downward trend in the rate of house price growth" since the beginning of the year.

"September's price fall is consistent with the normal behaviour of the market during a slowdown. A mixed pattern of monthly price rises and falls is a typical feature of a more subdued housing market," commented Martin Ellis, Halifax chief economist.

However, he explains the housing market is still in a strong position, with the prospect of a house price crash still unlikely.

"The UK economy is in a strong position. Sound market fundamentals, including high levels of employment and a shortage in the number of properties available for sale will continue to support house prices," he said.

The survey finds London and the south-east had the biggest house price growth in the country over the last three months, with the average property now worth 2.3 per cent more than in June.

The south-east saw the second highest house price inflation, with prices up 1.8 per cent in the last quarter. Despite the large increases these figures are still below the recent rates of growth for the regions - a sign the market is slowing even in the locations with the highest house price inflation.

There largest falls over the last quarter were in Northern Ireland (3.2 per cent), and the north (2.1 per cent).