UK house prices fell another 1.7%, now down 12.4% annually

Nationwide released its monthly survey of U.K. house prices and the results are not promising. In September 2008, the month-to-month of 1.7% matched last month’s decline, but the annual change in Nationwide’s index fell 12.4%, the largest fall since at least 1991.

Nationwide’s Chef Economist Fionnuala Earley, always looking for a silver lining, had this to say about the decline:

House prices fell by 1.7% in September. This brings the price of a typical house in the UK to £161,797, 12.4% less than at this time last year. House prices have now fallen for eleven consecutive months, but the monthly rate of fall has been almost unchanged in the last three months. 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.

In my view, the U.K. is headed for American-style declines which now exceed 20% peak-to-trough on a nominal basis. Earley did go on to say:

One year on from the credit crunch things look very different
Casting back one year there have been some astonishing and unpredictable developments in the housing and financial markets. In September 2007 the credit crunch had just begun, house prices were rising at an annual rate of 9.0%, the number of house purchase approvals per month was averaging at around its long term trend, almost 40% of first-time buyers were borrowing over 90% and the Bank Rate was at 5.75%, but with many expecting it to increase to 6%. The situation in September 2008 could hardly be more different. House prices are falling, activity has contracted sharply, fewer than 20% of first-time buyers are borrowing above 90%, and the Bank Rate has fallen to 5% and is expected to fall to 3.5% by the end of 2009.

Source
House Prices in the Fall – Nationwide Media Centre