The UK house market suffered a major jolt today as figures from the Halifax revealed prices slumped 3.6% in September – the biggest monthly drop since figures were first compiled in 1983.
The group said an increase in the number of properties on the market, combined with a drop in demand fuelled by uncertainty over the economy, forced prices down.
Martin Ellis, housing economist with Halifax, said it is too early to conclude that September’s fall represents the beginning of a sustained period of declining house prices.
He added: “Looking at quarterly figures – a better measure of the underlying trend – house prices in the third quarter of 2010 were 0.9% lower than in the second quarter of 2010.
“This rate of decline is significantly slower than the quarterly changes of between minus 5% and minus 6% that were seen in the second half of 2008.”
The Halifax added that house prices still remain higher than a year ago – with prices in September up 2.6% on last year.
Mr Ellis added that prospects for the housing market are uncertain.
He said: “Earnings growth is expected to be very modest over the next year, tax rises are on the way and more people are putting their homes on the market. These will all be constraints on the market, dampening house prices.”