Homes are now being valued at the same level as they were three years ago, figures show.
The decline in house prices continued in October as values plummeted 2.2 percent over the month. According to the latest house price index from Halifax, the average cost of a property in the UK is now £168,031 - the same level last seen in October 2005.
Prices have now fallen by 13.7 percent over the last 12 months, which Halifax chief economist Martin Ellis claims has led to a vast improvement in affordability. He said the house price to average earnings ratio has dropped below 5.0 for the first time in four and a half years, with further improvements expected in the months ahead.
However, he stressed: "Housing market conditions remain challenging in the face of the significant pressures on householders' incomes and the reduction in the availability of mortgage finance since last summer."
Indeed, consumers are finding it increasingly difficult to secure mortgage finance as lenders demand bigger deposits and cut back on the number of deals they are offering. They are facing renewed calls today to pass on an expected cut in the base rate by the Bank of England to ease conditions for homebuyers.
The British Bankers Association said today that each mortgage lender will make its own commercial decision on how to respond to the actions of the monetary policy committee.
