House price fall steepest in 25 years

House prices fell at their sharpest annual rate in at least 25 years in September, as the credit crunch continued to take its toll on the housing market, according to data from Britain's biggest mortgage lender.

HBOS said its Halifax house price index fell 1.3 per cent last month, taking prices down 12.4 per cent in the three months to September compared with a year ago, the sharpest fall since records began in 1983. Analysts said that although the Bank of England's emergency half percentage point cut in borrowing costs on Wednesday would provide some relief to homeowners, house prices still had further to fall as lending conditions were still tight.

"House prices seem poised to fall substantially further as the fundamentals remain largely negative," said Howard Archer, economist at Global Insight. "Credit conditions remain extremely tight and this continues to exert upward pressure on many mortgage rates and limit the amount of mortgages available."

Last month's fall in house prices was the smallest in seven months, taking the average house price down to £172,108. In August, prices fell 1.8 per cent on the month, for a 10.9 per cent drop year-on-year. Halifax chief economist Martin Ellis reckons prices have still further to fall.