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The average price of a property sold at auction dropped nearly 30% over the past 12 months leading analysts to predict that house prices in the general market have a lot further to fall.
The average price of the 4,796 homes sold at auction over the past quarter was £123,209, 29.6% below the average price of £172,470 in the same quarter last year, according to figures compiled by the property auction group EIG.
"House prices are falling much faster than the published house price indices suggest," said the Liberal Democrat Treasury spokesman, Lord Oakeshott. "Auctions are the real market where contracts are exchanged and a 10% deposit paid as soon as the hammer falls.
"The Halifax and Nationwide indices are well behind the average fall in house prices, because they include houses approved for a mortgage. With mortgage lending down to a trickle, the 28.6% average price fall of homes sold at auction gives a true picture."
The futures market also predicted further falls. A properties derivative price report by Tradition Property showed that prices are likely to fall by a further 23.5% over the next year and 32.5% over the next two years, with 10 years to wait before prices get back to today's levels.
Bank of England data out yesterday showed that mortgage approvals for September rose for the first time in a year. Several analysts believe that they may have hit bottom but could stay there for many months to come.
The Bank of England said that lenders approved 33,000 mortgages for new purchases last month, slightly up from 32,000 in August. They were still 67% lower than a year earlier and almost a quarter of their peak in late 2006.
Remortgages accounted for half of all new loans and, at 72,000, were 30% lower than a year earlier.
"Approvals are likely to remain close to rock-bottom levels for many months yet," said Seema Shah at consultants Capital Economics. "The sharp rise in unemployment that we expect, the contraction in economic activity, as well as the continued tightening in lending criteria, will all curtail housing market activity. In turn, this will bear down further on house prices. We expect house prices to have fallen by 35% by the end of next year."
Net mortgage lending was £2.2bn in September, well below the £3.5bn monthly average for the previous six months. August's mortgage lending figure was revised to show a net repayment of £691m - the first repayment since the series started in April 1993.
The Bank added that consumer lending through personal loans and credit cards increased by £0.3bn, the weakest rise since 1993.
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