House prices fell by 12.4% in the last year, according to the latest figures from the UK's second largest mortgage lender, the Nationwide Building Society. Analysis from the Royal Institute of Chartered Surveyors suggests that even larger falls may be on their way.
The Nationwide's statistics show that the average price for a home is now £161,797, compared to a peak of £186,044 in October last year. In its most recent figures in August, the UK's largest mortgage lender, Halifax, reported a fall of 11.9% year-on-year.
The most recent figures from the Land Registry have not yet caught up with those shown by the major lenders, but also show significant falls. Land Registry statistics for August record a fall of £8,320 against average prices of a year before. Prices fell by almost £4,000 compared to completions just a month before.
The East of England suffered the largest falls in the Land Registry figures, with prices dropping by 6.7%. The smallest reduction was in the North West, where they fell by just 2.5%. Prices actually rose in Hartlepool, by 4.8%.
The significance of some of the statistics should be treated with caution, because of the sharp reduction in the number of transactions - itself indicating a weak market. Sales in June were 56% below those of a year before, according to the Royal Institution of Chartered Surveyors (RICS).
"[The] data from the Land Registry confirmed that house price falls are gathering momentum," says Seema Shah at Capital Economics. "With transactions less than half of their level a year ago, coupled with the fact that the outlook for the economy is steadily deteriorating, the speed of this housing market correction still has the potential to step up a gear."
Fionnuala Earley, chief economist at the Nationwide, was slightly more upbeat, suggesting price falls may be levelling off. "House prices have now fallen for 11 consecutive months, but the monthly rate of fall has been almost unchanged in the last three months," she says. "The less volatile three month-on-three month series has also barely changed for the last three months, after accelerating in the first half of the year. This may suggest the beginning of some stabilisation in the pace of house price falls."
But the Royal Institute of Chartered Surveyors (RICS) reports a still downward trend - at least against what vendors are hoping to achieve. It says that house sellers are having to accept offers on average 9% below asking prices.
"With housing transactions currently at a 30-year low, many vendors are being forced to lower their asking prices to achieve a sale in an ever shrinking market or they are being forced to rent their property until the market picks up," says Simon Rubinsohn, RICS chief economist. "The gap between asking prices and selling prices could widen in the coming months as the downturn in the economy becomes more visible."
According to RICS, house prices in Scotland are continuing to rise. But in the North of England, vendors are accepting offers 12.5% below asking prices. As yet, though, the impact on London has been smaller - and more variable - than that in the rest of England. However, RICS warns, the global financial crisis could now have a big impact on prices in the capital.
There are also growing signs of the seizing-up of the lending market. Mortgage brokers are increasingly recognising that they are unable to obtain loans for their clients, particularly those requiring high loans to values (LTVs). Some 68% of mortgage brokers say they have been unable to source a mortgage for clients in the past two months, according to the latest survey of brokers conducted by their representative body, the Intermediary Mortgage Lenders Association (IMLA).
The problem is worst in the south east of England, where 70% of brokers have not been able to obtain mortgages. Lenders are requiring higher deposits, cutting LTVs. There have also been significant withdrawals of mortgage products from the market. The difficulty is most acute for clients seeking remortgages, says IMLA.