Record house price falls

House prices have plunged 14.6% during the year to the end of October, according to the Nationwide Building Society.

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But while the annual decline has reached a new record, the monthly drop has continued to slow for the fourth consecutive month.

Chief economist Fionnuala Earley says it is a further sign that the UK is heading into recession, which would put further pressure on prices.

She said: "There is likely to be more movement on asking prices as sellers adjust to the prevailing conditions and reassess their own needs.

"Consumers still expect prices to continue to fall into 2009, and will therefore be reluctant to trade without some discount on the asking price. This type of stalemate ultimately limits the number of transactions that can take place."

Annual house-price growth was running at 9% last September before the credit crunch struck. Mortgage approvals were also in line with their long-term average, and 40% of first-time buyers were borrowing more than 90% of their home's value.

Now, in the post-crunch environment, house-purchase approvals have dropped to new lows in the third quarter of the year at around a third of the long-run trend.

Copyright © PA Business 2008

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