British house prices fell 1.7 per cent in the month of September to post their biggest annual drop since comparable records began in 1991, the Nationwide building society said today.
The 11th consecutive monthly decline highlights the sharp reversal of fortune for the property market since the credit crunch took hold last summer, bringing an end to a decade in which property values almost trebled.
Nationwide said house prices in August were 12.4 per cent lower than a year earlier. Before 1991, Nationwide conducted quarterly house price surveys. The largest annual fall on that measure was a 10.7 per cent drop recorded in the early 1990s.
"Casting back one year there have been some astonishing and unpredictable developments in the housing and financial markets," said Fionnuala Earley, Nationwide's chief economist.
"We would need to see a significant shift in consumers' sentiment before we begin to see any real recovery in activity and subsequently house prices."
September's decline pushed the average price of a property to £161,797, the lowest since February 2006.
The precipitous drop in house prices both in Britain and overseas has been a key driver of the crisis that is rocking the global banking sector and threatening to send many industrialised economies into recession.
A reluctance by banks to lend to each other had led to a sharp increase in wholesale funding costs in recent weeks. Several mortgage providers have responded by raising their own mortgage rates.
Policymakers are concerned a weakening property market could feed a vicious downward spiral of falling consumer demand and rising unemployment.
Futures markets suggest the Bank of England will cut interest rates to 4.75 per cent next week and to 4 per cent by this time next year.
Reuters