House prices fell by 0.7 per cent during October as buyers continued to stay away from the market, figures showed today.
The average cost of a home in the UK dropped by nearly £2,400 to £164,381 during the month, as the downward trend in prices seen since the start of the summer continued, Nationwide said.
House prices have either fallen or remained static in every month since the end of May, with the drops seen during 2010 nearly wiping out the gains made during the early part of the year.
The quarter-on-quarter change to house prices, which is generally seen as a smoother indicator of market trends, also showed that the rate at which property values are falling has accelerated.
House prices dipped by 1.5 per cent during the three months to the end of October, compared with a 1 per cent slide during the quarter to the end of September.
Nationwide said this was the biggest fall since April 2009, although it remains well down on the quarterly drops of 5 per cent and 6 per cent recorded during the second half of 2008.
The annual rate of house price growth also declined for the sixth consecutive month, falling to just 1.4 per cent - less than half the 3.4 per cent recorded during the previous month.
Martin Gahbauer, Nationwide's chief economist, said: "If the recent trend in house prices were to continue through November and December, the annual rate of house price inflation would drop to between 0 per cent and minus 1 per cent by the end of 2010. This would compare to a rate of 5.9 per cent at the end of 2009."
House prices have come under increasing pressures in recent months as potential buyers have adopted a 'wait and see' approach until the outlook for both the housing market and the wider economy becomes clearer.
But sellers have continued to return to the market, creating a mismatch between supply and demand and giving buyers the upper hand in price negotiations.
Mortgage lending also remains tight, preventing many people who want to press ahead with a move from doing so.
It remains to be seen what impact the spending cuts announced in the Comprehensive Spending Review will have on the property market, but public sector job cuts could put further pressure on prices in some areas of the country.
Halifax reported that house prices fell by a record 3.6 per cent during September, although the group had reported price rises during the two previous months, when Nationwide recorded a fall.
Figures from the British Bankers' Association released earlier this week showed that net mortgage lending, which strips out redemptions and repayments, has slumped to its lowest level for a decade, as activity in the housing market remained muted.Reuse content