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The average price of a home in England and Wales has fallen by 7.3% over the past 12 months as banks and building societies continue to tighten lending conditions.
According to the latest survey by property consultants Hometrack the average price of a home fell by 1.3% in the month to October. It says that prices fell in nearly three-quarters of the country in October, with the largest annual declines in London and the south west, with prices down 8.6% and 8.1% respectively.
Richard Donnell, director of research at Hometrack, said: "Weak consumer confidence continues to undermine demand for housing with a 35% fall in the number of applicants registering with agents over the past six months. The expectation of a forthcoming recession and rising unemployment will further undermine demand for housing and continued price falls are inevitable in the months ahead." The main driver in the fall in house prices is the inability to obtain a mortgage. Several lenders have increased their rates over the past year. Nationwide increased its rates on its tracker mortgage deals last week.
Matthew Carter, divisional director for mortgages at Nationwide, said: "It is regrettable that we have to increase our tracker rates but we must take into account ongoing volatility in the wholesale markets and the high cost of funding."
There are signs in Hometrack's survey that vendors are becoming more realistic on pricing - something that may start to slowly free up the logjam in transactions, which are at a record low.
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