Halifax gloom as it sees house prices drop again

A disappointing October for house prices swelled the gloomy mood music over the UK's recovery yesterday as lender Halifax warned of a deteriorating property market.

Its latest house price index showed a 0.7 per cent decline in prices, the fourth successive month of falls, which takes the average UK price to £158,426, down 1.7 per cent compared with last year.

The blow follows downbeat survey evidence from manufacturers, builders and services firms over the month, dampening economic prospects for the final three months of the year after a 1 per cent surge between July and September. The Bank of England meanwhile faces a close-run decision over whether to pump billions more into the economy this week.

Deutsche Bank chief economist George Buckley said: "The post-Q3-bounce period is beginning to look more fragile than we had hoped, and while we continue to see the Bank on hold [tomorrow] the risk of further action, whether this week or at future meetings, rises with each piece of softer news."

Halifax's housing economist Martin Ellis blamed a "weak economic background" as he said: "Signs of a modest deterioration in the trend in house prices continued in October." The figures contrasted with a slight bounce in prices shown by Nationwide's rival index.