House prices in Britain fell by 1.4% in October, and are now 14.6% lower than a year ago, according to Nationwide building society's latest survey.

Prices are on course to end the year at least 16% lower than at the start of 2008. The main lenders were predicting at the beginning of the year that house prices would remain flat for the whole 12 months.

The price of an average house was £158,872 - nearly £30,000 less than in October 2007.

House prices have now declined for 12 months in succession, although the monthly fall in October was slightly smaller than the previous three months.

Nationwide said that house sales were at their lowest level for 34 years.

Asking prices have been falling, but more slowly than other measures, the society said, and there is evidence that most sellers do not yet feel any need to reduce their prices dramatically for a quick sale.

"A looming recession and continued financial market instability have uncomfortable implications for the housing and mortgage markets, and will undoubtedly affect the pace of recovery in house prices,” said the society’s chief economist, Fionnuala Earley.

"However, the speed of the economic slowdown, and the determination on the part of central banks to return stability to the financial markets, does mean that interest rates are likely to continue to be cut sharply," she added.
 
 

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