Houses have lost 14.6 per cent of their value during the year to the end of October following 12 months in a row of plunging prices, the Nationwide Building Society said today.
The mortgage giant said prices fell by a further 1.4 per cent in October. The average price of a UK property now stands at £158,872, almost £30,000 less than a year ago.
Today's price data shows that while the annual decline has reached a new record, the monthly drop has continued to slow for the fourth consecutive month.
But Nationwide's chief economist Fionnuala Earley said it was a further sign that the UK was heading into recession, which would put further pressure on prices.
"There is little doubt that the economy is heading into recession," she said.
"As the economy weakens further there is likely to be more movement on asking prices as sellers adjust to the prevailing conditions and reassess their own needs.
"While there will always be a rump of sellers who will need to move in order to accommodate job or family changes there will be others who are affected by economic conditions more acutely. So we should expect a moderation of price expectations on the part of sellers in a weaker economic environment," she added.
The current price falls are being compounded by a reluctance among sellers to reduce their asking prices, according to the Nationwide.
It said sales were often only going through when sellers were willing to budge on price.
"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 which can take place," said Ms Earley.
The UK's property market has been hit by the combination of stretched affordability and the mortgage drought due to the credit crunch.
Annual house price growth was running at 9 per cent last September before the credit crunch struck.
Mortgage approvals for house purchases were also running in line with their long-term average and 40 per cent of first-time buyers were borrowing more than 90 per cent of their home's value.
Now in the post-crunch environment, house purchase approvals dropped to new lows in the third quarter of the year at around a third of the long-run trend.
It also now takes an average of 12 weeks to sell a house compared with 7.4 weeks this time last year.Reuse content