House prices across the UK dived by a record 15% during the past year, wiping nearly £30,000 off the average home's value, Britain's biggest mortgage lender said today.
House prices across the UK dived by a record 15% during the past year, wiping nearly £30,000 off the average home's value, Britain's biggest mortgage lender said today.
The value of property tumbled by a further 2.2% during October as the market continued to be squeezed by the mortgage drought, Halifax said.
The latest fall left the average home costing £168,176, down from around £197,698 in October last year.
The monthly fall was the biggest drop since May, and well up on September's slide of 1.3%.
Annual house price inflation, which measures prices during the previous three months compared with the same period a year ago, also dropped to a new record low of 13.7%.
Martin Ellis, Halifax chief economist, said: "Housing market conditions remain challenging in the face of the significant pressures on householders' incomes and the reduction in the availability of mortgage finance since last summer."
But he added that housing affordability was improving "significantly" with the house price to average earnings ratio dropping below five for the first time in four-and-a-half years.
This key affordability measure has now fallen by 16% from its peak in July last year, when house prices were 5.84 times higher than average earnings, to stand at 4.92 in August.
The group expects the ratio to continue to ease towards its long-term average of four as house prices fall further.
Halifax also said market activity was showing signs of stabilising, with the number of mortgages approved to buy a house remaining broadly unchanged in September for the third month in a row.
The figures are in line with those reported by Nationwide Building Society last week, which showed house prices dropped by 14.6% during the past year, losing 1.4% of their value in October.
The latest data comes hours before the Bank of England's Monetary Policy Committee announces the result of its two-day interest rate setting meeting.
It is widely expected to cut the base rate by at least 0.5% to 4%, with many economists predicting a 1% reduction as the economy continues to worsen.
But homeowners hoping to see their mortgage rate fall are likely to be disappointed, with the majority of lenders not expected to pass on the reduction in full to their standard variable rate customers.
The problem for lenders is that although the official cost of borrowing is falling, inter-bank lending rates remain stubbornly high, leading to higher mortgage rates.
These higher rates, combined with the increasingly high deposits most lenders now demand, are offsetting much of the benefit of house price falls for people trying to get on to the property ladder.
Meanwhile, new car sales - a key indicator of consumer confidence - slumped again last month, it was revealed today.
The number of new UK registrations in October 2008 totalled 128,352 - a 23.05% drop on the October 2007 figure, the Society of Motor Manufacturers and Traders (SMMT) announced.
The October decline was the worst year-on-year monthly drop since June 1991 and followed hefty falls in purchases in August and September this year, showing just how hard the credit crunch is biting.
