Record drop for property prices - but they're stabilising

The biggest ever decrease in house prices has been recorded by the Nationwide Building Society. Property prices dropped by 12.4 per cent year-on-year, which comes after one of the nation's biggest building company has had to almost halve the asking prices on new homes.

September marked the 11th consecutive month of price falls with a decrease of 1.7 per cent. However the good news is that the rate of decline appears to be stabilising and has remained fairly steady over the last three months. This is a big change from earlier in the year when the rate of decline was accelerating.

But it's still a far cry from September 2007 house prices were growing by 9 per cent annually and 40 per cent of buyers were borrowing more than 90 percent of their home's value.

Fionnuala Earley, Nationwide's chief economist, said consumers' confidence in the market changed almost immediately following the problems at Northern Rock.'

'As expectations have collapsed, house purchase approvals have fallen to less than a third of their long run trend.'

It's not surprising that buyers are hesitant to take the plunge when they are faced with tighter mortgage criteria, less money in their back pocket and unstable economic conditions, but until that changes house prices will continue to fall.