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London - House prices in Britain fell for the 11th consecutive month in September, wiping 12.4% off the value of the average British home compared to 12 months ago, Nationwide Building Society reported on Thursday.
The lender recorded that house prices declined by 1.7% month-on-month in September, bringing the cost of the average home down to £161 797 pounds, over £20 000 less than a year ago.
The decline is the largest drop in house prices Nationwide has recorded since it began producing monthly data 17 years ago.
Nationwide's chief economist, Fionnuala Earley, said that the monthly drop in prices was the same as it was in August, suggesting "the beginning of some stabilisation in the pace of house price falls".
But even with less volatility, economists agree that price falls will continue, as lending conditions tighten and mortgage rates rise amid the financial turmoil. Indeed, three major British lenders - HSBC, Woolwich and First Direct - all increased their mortgage rates last week.
The knock-on effect of the rate increases will be to decrease the number of people able to secure mortgages, and therefore further erode demand in the housing market.
"House prices seem poised to fall substantially further for an extended period as the fundamentals are pretty ugly," said Howard Archer, chief British economist at Global Insight.
"Affordability ratios are still very stretched despite the double-digit fall in house prices seen so far, while lending conditions are tightening even further due to the heightened financial market problems," he added, predicting that the average price of a British home would be 34% lower than its late 2007 peak by the first half of 2010.
- Sapa