House prices edge further downward

House prices fell by 0.2% in September, according to the latest data from the Land Registry.

The government office said the change takes the average UK property price to £166.769, with the West Midalnds experiencing the greatest monthly fall, of -1.4%. The average twelve-month increase in prices has now fallen back to 5.2%.

Land Registry data is the most reliable record of changes in house prices, albeit reporting slightly later than data from mortgage lenders.

The news came as the Nationwide reported a price fall of 0.7% in October, bringing the average price down to £164,381 and making the annual rise just 1.4%.

Martin Gahbauer, Nationwide’s chief economist, said the three month on three month rate of change – a smoother indicator of the recent price trend – fell to -1.5% in October from -1.0 % in September, the largest decline over three months since April 2009.

However, this is still well below the 5-6% rates of decline on the three month measure seen during the second half of 2008. He 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% and -1% by the end of 2010. This would compare to a rate of +5.9% at the end of 2009.”