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Sharp fall in house prices for October

Thursday, 6 November 2008 12:00 AM

House prices fell at a record pace in October and are down 13.7 per cent from last year.

According to the Halifax house price index, the average house is now worth £168,176, down 2.2 per cent from September, crushing hopes the fall had started to slow.

"This is a sharper drop than was seen in the early-1990's housing downturn. Indeed, it was the sharpest drop since the series began in 1983," said Global Insight economist, Howard Archer.

Homes in the UK are now at October 2005 levels.

Martin Ellis, chief economist, said: "Housing market conditions remain challenging in the face of the significant pressures on householders' incomes and the reduction in the availability of mortgage finance since last summer.

"But housing affordability is improving significantly. The house price to average earnings ratio has fallen below 5.0 for the first time for four and a half years. We expect a further improvement in the ratio over the coming months."

Although affordability may have improved, finding a mortgage is still proving difficult.

Approvals in the third quarter of 2008 were 25 per cent lower than in the second quarter, according to figures from the Bank of England.

The Halifax data follows on from Nationwide reporting that annual house prices sank by 14.6 per cent in October from 12.4 per cent in September - the largest annual fall in house prices since Nationwide started producing monthly data in January 1991.

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