Page last updated at 06:00 GMT, Thursday, 2 October 2008 07:00 UK

UK house prices 'continue fall'

For sale sign
The fall echoed the monthly drop in August

UK house prices have fallen for an 11th consecutive month, dropping by 1.7% in September, according to the Nationwide.

The lender recorded a 12.4% annual drop in prices, pushing the cost of the average UK home down to 161,797, more than 20,000 less than a year ago.

Nationwide said the pace of house price falls had stabilised, but warned the next year or two would be "difficult".

House prices were down year-on-year across the UK, with southern England suffering worse than the north.

The rate of fall, which was the same as in August, has remained relatively unchanged in the past three months.

But the annual fall was at its sharpest for 17 years.

'All change'

House price graph

"Casting back one year, there have been some astonishing and unpredictable developments in the housing and financial markets," said Fionnuala Earley, Nationwide's chief economist.

But she added that in the long-term there was no reason why house prices would not continue to grow in real terms even though there was a "sharp correction" now.

How long the correction lasts and how deep the fall in prices is depends largely on sentiment, as well as an end to the turmoil in the financial markets, she says.

Her analysis comes shortly after the Council of Mortgage Lenders suggested that predicting the short term course of house prices was "futile".

Regional breakdown

The Nationwide has also released figures showing prices during the third quarter of the year in different areas of the UK.

A homeowner on being told to drop her original asking price

Ms Earley said that a distinctive feature of the July to September period was the accelerating fall in house prices in the south of England compared with the north.

Four of the six regions registering double-digit price declines were in the South, with East Anglia and the South West showing the biggest annual drops - both 11.4%.

Northern Ireland showed the steepest decline in house prices across the UK, which are now 29.8% lower than a year ago.

THE LOCATIONS LEAST AFFECTED BY THE DOWNTURN
Durham city: 2% annual rise. Average price 157,613
Edinburgh: 3% drop, 249,587
Oxford: 3% drop, 321,848
Canterbury: 4% fall, 215,608
Source: Nationwide

But the price rises had been so rapid in recent years, that prices are now only back to the same level as the third quarter of 2006.

In Scotland, where house prices had risen in the second three months of the year, recorded a 5% drop between July and September compared with the previous three months. That was a bigger drop than the UK average of 4.6%.

Wales witnessed the smallest fall in prices compared with other areas of the UK, with a three-month on three-month fall of 1.9% in July to September.

"The latest fall-out in the property market is not altogether surprising given the turmoil in financial markets over the past month," said Simon Rubinsohn, chief economist of the Royal Institution of Chartered Surveyors (Rics).

"The recent increase in some mortgage rates and the continuing squeeze on the supply of loans suggests that further price falls are likely over the coming months."

FALL IN HOUSE PRICES BY REGION

Region Average price Quarterly % change Annual % change
UK 165,188 -4.60% -10.30%
Wales 139,583 -1.90% -9.20%
Scotland 141,657 -5.00% -7.10%
Northern Ireland 159,970 -10.80% -29.80%
English regions
North 123,019 -3.50% -8.60%
Yorkshire & Humberside 140,634 -3.20% -10.10%
North West 144,513 -3.20% -9.10%
East Midlands 141,572 -3.70% -9.80%
West Midlands 150,046 -3.40% -9.10%
East Anglia 162,872 -5.10% -11.40%
Outer South East 191,898 -5.10% -10.90%
Outer Metropolitan 231,998 -5.80% -10.30%
London 274,124 -3.90% -9.40%
South West 181,074 -6.40% -11.40%




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FROM OTHER NEWS SITES
Telegraph £23000 what average house lost in a year - 14 hrs ago
Guardian Unlimited Bank warns of rising loan defaults as house prices fall - 16 hrs ago
Glasgow Herald Housing market downturn has crossed border - 19 hrs ago
Gulf Daily News UK house prices fall 1.7pc - 19 hrs ago
Sydney Morning HeraldUK house prices fall most since 1991 - 21 hrs ago
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