House prices falling at record rate

The annual rate at which house prices are falling continued to accelerate during September to hit a new record of 5.1 per cent, Government figures showed today.

The fall left the average property in the UK costing £208,583, nearly £12,000 less than a year ago and the lowest level since March 2007.

But homes lost only 0.1 per cent of their value during September itself, well down on August's drop of 2.7 per cent.

The figures came as the Royal Institution of Chartered Surveyors said estate agents sold an average of just 10.9 properties each during the three months to the end of October, dropping to only six homes in London.

Around 81.8 per cent more chartered surveyors reported seeing price falls than those who saw price rises.

But on a brighter note, a balance of 20 per cent of those questioned said they thought sales levels would increase during the coming three months.

House prices are now falling in all regions of the country on an annual basis, with Northern Ireland seeing the biggest drop of 15.8 per cent, followed by the East Midlands and West Midlands at 7 per cent and 6.8 per cent respectively, according to the Communities and Local Government department (CLG).

Scotland has seen the lowest level of house price falls, with properties losing just 0.8 per cent of their value during the past year.

The annual rate at which house prices are dropping eased in three of the UK's regions during the month, although it accelerated in the other nine.

The figures also showed that while the average cost of a terrace house fell by 1.3 per cent during September and the price of semi-detached homes dropped by 0.7 per cent, there was a 1 per cent increase in detached house prices, while prices for flats and bungalows rose by 0.6 per cent and 0.7 per cent respectively.

First-time buyers are benefiting more from the price falls than former owner-occupiers, with the average cost of a first home falling by 7.8 per cent during the year, compared with a drop of 4 per cent for a home-mover.

Some of this difference is likely to be due to the problems faced by first-time buyers in raising the mortgage finance they need, forcing them to buy cheaper properties.

Figures released by the Council of Mortgage Lenders today showed that while more than half of buyers did not pay stamp duty during September after the Government temporarily increased the threshold, the number of first-time buyers taking out a mortgage still hit a record low.