Friday, 29 October 2010 12:00 AM
The latest house price figures from Nationwide show that in just one month, average house prices fell by more than a month's average UK salary.
The average price of a home dropped 0.7 per cent in October - £2,376 in a month.
It brings the average price of a home to £164,381, down from £166,757 in September. If this trend continues for the rest of the year, house prices will have fallen by between zero and minus one per cent in 2010. In contrast, by the end of 2009 they had risen by 5.9 per cent.
Confidence is clearly very fragile and with the supply of property for sale outstripping demand it seems likely that house prices will continue to fall. The property market has seen a fall in einquiries from buyers and the number of mortgage approvals has also decreased.
Alison Beech, Business Relationship Director for Valunation, said: "The last few months have seen the publication of contradictory positive and negative house price indices, but the most recent reports have taken a turn for the worse. Nationwide reported a fall in house prices this week, and today's Land Registry House Price Index also showed a decrease."
She added: "While the recent austerity measures may not have managed to restrain GDP, they have certainly affected house prices and, by continuing to subdue consumer confidence and tighten household finances, it seems likely they will continue to do so for the remainder of the year."
The severity of the recently announced spending cuts hasve affected consumer confidence and hasve made the banks' criteria for lending even tougher.