House prices fall at record rate
Updated on 09 October 2008
House prices plunged at a new record rate during the year to the end of September - losing 13.2% of their value, Britain's biggest mortgage lender said.
The fall was the biggest ever recorded by the Halifax house price index, which posted a year-on-year decline of 12.7% in August.
Annual house price inflation, which measures prices during the previous three months compared with the same period a year ago, also dropped to a new record low, with falls of 12.4%, pushing the average cost of a UK home down to £172,108.
But on a brighter note, properties lost 1.3% of their value during September, the smallest monthly fall for seven months. At the same time, the fall of 5.2% during the third quarter was in line with one of 5.1% during the second quarter, suggesting the rate at which prices are falling could be stabilising.
Martin Ellis, Halifax chief economist, 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.
"The ongoing pressures on householders' income, combined with the reduction in the availability of mortgage finance, however, mean that market conditions will remain challenging."
The figures, which were in line with analysts' expectations, were broadly similar to those reported by Nationwide last week, which showed that house prices fell by 1.7% in September and 12.4% during the past year.
Halifax said the average house price was now at a similar level to January 2006, after losing £27,500 of its value since prices peaked in August last year.
But the decline in values had helped to ease affordability constraints, with the key house price to earnings ratio improving from a peak of 5.84 in July 2007 to 5.02 in July this year - the lowest level for more than four-and-a-half years.
The group said it expected the ratio, which has a long-term average of 4, to continue to improve as prices softened further.
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