House prices fall 0.9 per cent in October with prices down across 56% of the country, this compared to 34% in September and 30% in August.
Rising supply and faltering demand off the back of concerns over the economy and cuts in Government spending have led to deteriorating market conditions.
Demand for housing also dropped in October by -2.0%, again the fourth monthly fall in a row.
Yet despite the weakening outlook, the supply of homes coming to the market continues to grow.
October saw supply grow by 1.9%. Over the past six months the supply of homes for sale has grown by 14% while demand has fallen by 8%.
Across the country the North West saw the greatest extent of price falls (71% of postcodes registered
falls) followed by the West Midlands (66%).
Weakening market conditions have also resulted in the average time on the market rising to 9.6 weeks – the highest level since May 2009.
The East Midlands and Wales now have an average time on the market of over three months.
The proportion of the asking price being achieved has dropped to 92.7% the lowest level since September 2009.
Wales (91%) and the North East (91.3%) have the weakest underlying pricing in terms of the proportion of asking price being achieved.
Richard Donnell, director of research at Hometrack – the property analytics business – said: “House prices fell by 0.9% in October – the fourth monthly fall in a row and the largest fall since January 2009.
“Further price falls are inevitable in the run up to Christmas and are likely to continue into the first half of 2011.
“Looking to the near term, there is little prospect for any material change in market fundamentals. The mismatch between faltering demand and increasing supply looks set to continue, while the re-pricing process is likely to be drawn out into the first half of 2011.
“A stand-off is beginning to emerge between buyers waiting for prices to fall further and sellers being unrealistic on the price they’re willing to accept. We expect a modest adjustment in prices rather than a return to the double digit falls seen in 2008. Transaction volumes, already at low levels, are set to fall further.
“The first evidence of price falls was seen in London four months ago. Since then buyer expectations over house prices have weakened significantly. Growing uncertainty over the economic outlook and more recently, concerns surrounding the impact of the Comprehensive Spending Review have come at a time when we have seen an increase in the supply of new housing coming to the market.
“Together these factors have combined to exacerbate a downward pressure on prices.
“Over the last 6 months the Hometrack survey has recorded a 14% increase in the supply of homes for sale while demand has fallen by 8% over the same period. This mis-match continued over October with a 2% decline in demand and a similar sized increase in supply. The net result has been that a growing number of areas are seeing price falls.”