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House prices fall at record pace

Thursday, 30 October 2008 12:00 AM

House prices have posted their biggest ever annual drop on Nationwide's index since records began in 1991.

The value of an average house in October fell 14.6 per cent, or £30,000 from last year, Nationwide said, and is now typically worth £158,872.

However, the building society added the 1.4 per cent monthly fall was less than last month.

Fionnuala Earley, Nationwide's chief economist, 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."

Transaction levels are at historic lows, Nationwide said, with total turnover at its lowest level since 1974. It now takes on average 12 weeks to sell a house, 60 per cent longer than last year.

Nationwide suggested people are reluctant to move while they cannot get a good price on their property and are waiting for better times, leading to a "stalemate".

"This could however indicate that conditions are not yet very stressed, as sellers have not felt the need to dramatically reduce their prices for a quick sale," added Ms Earley.

Deep interest rate cuts would help those on variable rate loans and people coming to the end of their fixed rate mortgages.

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