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Property prices in England and Wales fell by 2.2% in September and the average house cost 8% less than in the same month last year, according to official figures published today.
The Land Registry's monthly report, considered the most accurate snapshot of the housing market, said the average home cost £168,814 last month, down from £183,526 in September 2007.
The rate of decline in prices has almost doubled since August, when prices were down 4.6% year-on-year, the first time the index had shown a fall since its launch in 2002.
Wales saw the sharpest fall in prices, a drop of 5.5% in September, and an annual fall of 10.7%.
The Land Registry figures highlight how far transactions volumes have plummeted since the downturn in the housing market began late last summer.
The most recent figures show that in the months between April and July, an average of 57,887 properties changed hands each month.
This represents almost half the volume of homes sold in the same period in 2007, when an average 110,828 transactions a month were recorded.
The report coincides with the Financial Services Authority's figures showing a jump of 71% in repossessions over the 12 months leading to the second quarter of 2008, while the number of homeowners in arrears has also increased by 16% over the year.
Howard Archer, chief economist at Global Insight, said the Bank of England was likely to attempt to support the housing market with "aggressive" cuts in interest rates.
Rates were cut by 0.5% to 4.5% earlier this month and the Bank is set to meet again next week.
However, Archer said this might not be enough to stop prices falling further.
He added: "With already accelerating unemployment set to pick up significantly further, the housing market will suffer from a marked rise in the number of forced house sales, and a reduction in the number of potential house buyers.
"Rising unemployment and recession will also keep wages down, thereby limiting the recovery in affordability stemming from falling house prices and lower interest rates."
Archer predicted house prices could fall by 33% from their August 2007 peak by the first half of 2010.
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