Page last updated at 15:04 GMT, Thursday, 30 October 2008

Reaction to falling house prices

Sale signs
House prices have fallen for 12 months in a row, says Nationwide

The UK's biggest building society says that UK house prices have dropped for 12 consecutive months.

Nationwide's latest survey says property prices fell by 1.4% in October, pushing the price of the average home down to 158,872.

Homebuyers and sellers, as well as experts, have been giving their reaction to the latest figures.

JAMIE BROWN, FROM BOURNEMOUTH, TRYING TO SELL

Last October, my pregnant girlfriend Kerrie and I were looking to set up in a new home together. We both had properties and put both on the market with a view of putting the money together to buy our first family home.

Jamie Brown and family
Jamie Brown with girlfriend Kerrie Smith and their daughter Bonnie

Months and months went by with hardly any interest. All the while my girlfriend was getting bigger and bigger.

With a month of her pregnancy left, we found a delightful cottage in the New Forest which we really wanted.

Of course, the owners would not take any offer seriously without an offer agreed on our properties. I dropped the price of my house from 200,000 to 175,000 and still had no interest at all.

My girlfriend gave birth to our beautiful daughter, Bonnie, and they are now living with me in my house.

Her house is up for rent and has no interest and we are really worried for the future as she is still having to make mortgage payments, as am I.

OLIVER GILMARTIN, ROYAL INSTITUTION OF CHARTERED SURVEYORS

With the country teetering on the brink of recession, there seems little likelihood that house prices will recover in the short term as fears over job losses take centre stage.

Interest rates take time to filter their way through to the real economy with little hope of an immediate pick up in house prices
Oliver Gilmartin

Many vendors are being forced to lower their asking prices by as much as 13% in some regions to achieve a sale, or alternatively are placing properties in the rental market until house prices recover.

Amateur landlords should factor in the probability of some tenants struggling to pay rent as the economy slows.

Aggressive interest rate cuts, starting with at least 50 basis points next week, will help ease affordability constraints and go some way to reduce financing pressure on buy-to-let landlords.

However, interest rates take time to filter their way through to the real economy, with little hope of an immediate pick-up in house prices.

ROB HENWOOD, CASH BUYER

I'm a cash buyer. Prices need to fall to 2003 levels for me to be satisfied they are not overvalued.

Vendors and estate agents are stubbornly hanging on to their gains that were brought about by irresponsible and greedy behaviour by the banks, property media and, yes, average people. There is significant resistance to lowering the price.

That said, I have seen falls in asking prices for some properties of more than 25% between June and October. This needs to happen across the board. It will bring in cash buyers, it will also allow first-time buyers' deposits to go further and it will put us on to a more sustainable level of affordability that allows people to survive the bust.

My worry is that the government will stop at nothing to keep prices high and unaffordable, mortgaging our future to prop up a single asset class to keep them in power.

JAMES KNIGHTLY, ECONOMIST AT ING

This wealth destruction, coupled with growing concerns about negative equity, is likely to keep consumer confidence very weak.

This, combined with plunging business surveys and the third-quarter negative GDP rate, should ensure another Bank of England interest rate cut on Thursday of at least 50 basis points, with further large cuts likely in the next few months.

ED STANSFIELD, CAPITAL ECONOMICS

Despite the fact that house prices are falling at their fastest pace on record, the housing market remains fundamentally overvalued by almost any measure.

So as the economic downturn gathers pace, we still think that there is plenty of scope for the rate of house price deflation to accelerate.

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