House prices are now nearly 15% lower than they were just 12 months ago, with the average property worth £30,000 less than last year.
The latest figures from Nationwide show that prices fell 1.4% during October, the 12th consecutive monthly fall, bringing the annual change to 14.6%.
Fionnuala Earley, chief economist at Nationwide, says the price of a typical house is now £158,872, almost £30,000 less than a year ago, but still almost £30,000 more than five years ago.
The number of completed house purchases, as a proportion of the total stock of mortgages, is now at its lowest ever level since data collection began in 1974, with the amount of time it takes to sell a property up by more than 60% at 12 weeks.
“In some ways this lack of activity is puzzling given that the last time turnover rates approached this level was in the early 1990s when market conditions appeared more hostile,” says Earley. “In 1991 interest rates were at more than twice the level of today and general macroeconomic conditions were much worse. The economy was in deep recession and unemployment was well over two million.
“This suggests that there are other factors playing a part in the lack of activity in the current market.”
A lack of willingness among sellers to cut asking their asking prices could be one of the reasons transaction levels remain so low, according to Earley.
“Consumers still expect prices to continue to fall into 2009 and will therefore be reluctant to trade without some discount on the asking price,” she explains. “This type of stalemate ultimately limits the number of transactions which can take place.”
With this factor influencing conditions in the housing market, Earley believes that conditions may not be as stressed as they appear.
Ed Stansfield, property economist at Capital Economics, says that if the current rate of house price falls persist, values will be 20% below their October peak by February and 25% lower by June 2009.
“With the economic slump set to intensify in the months ahead, we continue to think that our forecast of a 35% drop in average house prices will have been delivered by the end of next year,” he adds.