Further evidence of UK house price fall

House prices fell last month as consumer confidence was hit by the US terrorist attacks, Britain's biggest mortgage lender said today.

Halifax reported a 0.5% drop in property prices during October, after saying price increases ground to a halt in September.

The group said the fall was a response to the slowdown in economic growth, deteriorating employment prospects and the knock to consumer confidence following September's attacks in the US.

But the decline was less than the one seen in October last year, and as a result annual house price inflation increased to 9.4% for the year to the end of October, from 8.8% in September.

Martin Ellis, Halifax group economist, said: "House price movements over the past few months as a whole indicate a clear downward shift in the underlying trend, with prices increasing at a somewhat slower pace compared with earlier in the year.

"This is consistent with reports from estate agents and house-builders and the latest market figures on the number of mortgage approvals, which all show signs of a slowdown in housing market activity."

But he added that despite this month's fall the group expected house prices to rise during the coming year, though at a slower pace.

Today's figures are in line with one's published by Nationwide at the end of last week, which reported a 0.5% fall in house prices during October.

Mr Ellis said: "Looking ahead, continuing economic growth, low interest rates and housing affordability levels that are not stretched should support the housing market.

"We expect house prices to continue rising over the coming 12 months, albeit at a more modest pace."

The average price of a property is now ?93,616.

Mr Ellis said there was no need for home-owners to panic, and that some of the reduction was a result of the terrorist attacks in the US, which was likely to have only a temporary effect on the market.

He added that while the market had come off the boil, the fall of 0.5% was small compared with some of the drops seen during 2000.

David Bitner, mortgage technical manager at the MarketPlace at Bradford & Bingley, said: "I think prices have come off the boil.

"People have for the last three to four years achieved asking price for properties.

"Now what we have seen is a general slowdown in buyers in the market and properties increasing, and this has caused people to be able to barter, and people are willing to accept offers below the asking price."

But he added that going forward the market looked stable, and he could not see any evidence for a major fall in prices while interest rates remained so low.