House prices fell 0.7% in October, says Nationwide

Nationwide's Chief Economist Martin Gahbauer on the housing market

House prices dropped in October compared with the previous month as the property market saw an autumn fall, according to the Nationwide.

The building society said that prices were down 0.7% compared with September, with the average home now costing £164,381.

The more reliable three-month on three-month comparison showed prices fell by 1.5% in October.

The average home still costs 1.4% more than it did a year ago.

However, this was closer to parity than in September, when the difference was 3.1%.

"If the recent trend in house prices were to continue through November and December, the annual rate of house price inflation would drop to between 0% and -1% by the end of 2010," said Nationwide's chief economist Martin Gahbauer.

First-time buyers

The drop in prices would generally be good news for those trying to get on the property ladder.

But first-time buyers still face the demand for high deposits from lenders, who are keen not to hand out mortgages to those who may be at higher risk of defaulting.

A separate report by the Home Builders Federation claimed that the average first-time buyer would need to save all their earnings for more than two years to get on the property ladder.

The group said a typical first-time buyer needed to save a deposit of just over £37,000 to buy an average priced starter home of £155,000.

The average age of a first-time buyer, unassisted by their parents or other family, was 37 years old, the report said.

"First-time buyers - the life-blood of the housing market - are almost entirely shut out," said Stewart Baseley, executive chairman of the federation.

"We desperately need an increase in lending and a properly functioning and sustainable mortgage market."

Annual change in UK house prices graph
Regional figures

Figures from the Land Registry - which is considered the most comprehensive survey but which lags behind other polls - suggested that the picture is different across various regions of England and Wales.

It said that prices fell by 0.2% in September from August, with the average home worth £166,769. This was the first negative figure for six months.

The average home was worth 5.2% more than a year earlier, it said. However, the annual change ranged from a 0.2% rise in the north-east of England to an 8.8% rise in London.

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