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The average price of a house in Britain is £30,000 less than it was a year ago, Nationwide said yesterday, with prices tumbling in the year to October at their sharpest rate since 1952.
Britain's biggest building society said prices fell 14.6% over the past 12 months to £158,872, and dropped 1.4% in the month to October - the 12th monthly fall in a row.
Nationwide said that despite the fall, housing transactions were at their lowest level since 1974. Fionnuala Earley, the society's chief economist, said one explanation was that it was only sellers willing to negotiate on price who were seeing sales go through. "While others refuse to cut their price, the levels of activity are constrained."
Economists have predicted that house prices have a lot further to fall. Howard Archer at IHS Global Insight, said: "Faster rising unemployment, major concerns over recession and widespread expectations that house prices will come down further seem set to depress housing market activity and prices for some considerable time to come."
Consultants Capital Economics forecast this week that prices would fall 35% by the end of next year and Andrew Clare, professor of asset management at Cass business school, said prices would not regain their 2007 peak until 2023.
Nationwide is the first major lender to report on the state of the market in October and many had hoped that transactions had picked up after the Bank of England cut interest rates by 50 basis points, to 4.5%, earlier in the month.
However, analysts said that lower interest rates were not helping free up the mortgage markets.
Ed Stansfield, property economist at consultants Capital Economics, said: "We expect the Bank of England will cut interest rates to 1%. With unemployment rising and expectations that house prices have much further to fall still widespread, lower interest rates will not stimulate housing demand. Lower interest rates will also do nothing to loosen mortgage lending criteria."
Bank of England mortgage data this week showed that mortgage approvals in September were 67% down on the same month a year ago. Banks and building societies have raised interest rates on mortgages as the credit crunch worsens.
Liberal Democrat Treasury spokesman, Lord Oakeshott, said: "British house prices and house builders are being hammered by rising unemployment, as in the 1990s recession.
"The government must empower councils and housing associations to spend the £8bn affordable housing allocation now on buying unsold homes and land at bargain basement prices. That will rescue hundreds of thousands of families from housing squalor and hundreds of thousands of builders from the dole queue."
Philip Hammond, shadow chief secretary to the Treasury, said: "These figures are yet more bad news for all those families who stretched themselves financially to buy their homes. It seems inevitable that more negative equity and repossessions are on the way."
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