Levels of price falls have been steadily increasing in recent months, with Hometrack figures showing that prices fell across 30% of the country in August and 34% in September.
Nevertheless, October’s figure remains far short of the 75% high recorded in October 2008.
Property prices fell 0.9% across England and Wales in October, the fourth monthly decline in a row and the largest drop recorded since January 2009.
Richard Donnell, director of research at Hometrack, said that further price falls up to Christmas and into the first half of 2011 were “inevitable”.
Market conditions have deteriorated in the face of rising supply and falling demand, as concerns heighten over the economy and the government spending cuts.
Hometrack figures showed that the supply of homes for sale has grown 14% over the past six months, while demand has fallen 8%.
This mismatch continued in October, with demand for housing mirroring house prices by dropping for the fourth consecutive month by 2%. In contrast, the supply of houses coming to market increased 1.9% over the month.
The North West saw the greatest extent of price falls, with 71% of postcodes registering a drop, followed by 66% of the West Midlands.
In addition, the weakening market has resulted in the average time on the market rising to 9.6 weeks, the highest level since May 2009. The East Midlands and Wales were the worst affected areas, with an average time on the market of more than three months.
Meanwhile, the proportion of the asking price being achieved in October dropped to 92.7%, with Wales and the North East achieving average proportions of 91% and 91.3% respectively.
Richard Donnell, director of research at Hometrack, said: “Looking to the near term, there is little prospect for any material change in market fundamentals. The mismatch between faltering demand and increasing supply looks set to continue, while the re-pricing process is likely to be drawn out into the first half of 2011.
“A stand-off is beginning to emerge between buyers waiting for prices to fall further and sellers being unrealistic on the price they’re willing to accept. We expect a modest adjustment in prices rather than a return to the double digit falls seen in 2008. Transaction volumes, already at low levels, are set to fall further.”
He added that the first evidence of price falls was seen in London four months ago and, since that time, buyer expectations over house prices have significantly weakened due to continuing concerns over the economy and impact of the Comprehensive Spending Review.
Donnell said: “As we head towards the end of the year and the usual pre-Christmas slow down, further price falls are inevitable and likely to become a feature of the market as we begin 2011.”
