House prices fall for third consecutive month

House prices fell for the third month in four in October, figures from Nationwide have shown.

The average price of a property fell 0.7 per cent this month after a flat reading in September.

That was almost twice the drop economists had expected and meant the three-month on three-month rate of decline accelerated to 1.5 per cent, the largest such decline since April 2009.

"October saw a continuation of the modest downward trend in house prices that began at the start of the summer," said Nationwide chief economist Martin Gahbauer.

The annual pace of house price growth slowed to 1.4 percent from 3.1 per cent. Nationwide said that if recent trend were to continue to the end of the year, it would leave prices flat to slightly lower over 2010 as a whole – compared with the rise of around six per cent recorded in 2009.

The lender's figures tally with a raft of data showing last year's property market recovery has moved into reverse as Britons prepare for the toughest government spending squeeze in generations.

Mortgage approvals have already fallen to their lowest in over a year as banks restrict credit to all but the safest of borrowers.

Nationwide said an expansion of the Bank of England's quantitative easing programme could help put a floor under prices. However, expectations the Bank might decide to pump more money into the economy as early as next month took a knock earlier this week when data showed the economy grew by a robust 0.8 per cent in the third quarter.

Rival lender Halifax said house prices fell 3.6 per cent in September, the biggest monthly decline since records began in 1983. It will publish data for October early next month.

Howard Archer of Global Insight said: "The 0.7 per cent drop in house prices in October reported by the Nationwide is consistent with our view that house prices will trend down gradually over the final months of 2010 and during 2011 to lose about 10 per cent of their value.

"Latest housing market data and surveys have been consistently weak, and the housing market really does not seem to have got much going for it at the moment."