House prices dropped in October according to Nationwide report

House Prices

Nationwide has reported a drop in house prices across the last two months.

First-time buyers are still finding it difficult to buy a house despite a drop prices.

House prices fell by 0.7% from September to October, according to the Nationwide building society, but first-time buyers are being “shut out” by the demand for high deposits in securing a mortgage.

The quarter on quarter comparison, which is a more reliable reflection of the state of the property market, showed that prices fell by 1.5%. However, the average price, which now stands at £164,381, is still 1.4% higher than last year.

Nationwide’s chief economist Martin Gahbauer said: “If the recent trend in house prices were to continue through November and December, the annual rate of house price inflation would drop to between 0% and -1% by the end of 2010”.

The fall in prices should be ideal for first-time buyers looking to purchase a bargain property. However, the high deposits demanded by post-recession hit banks have made it extremely difficult for people to secure a mortgage.

A report from the Home Builders Federation (HBF) showed that the average first-time buyer would have to save up two years of earnings to buy a house – a typical buyer would need to save £37,000 to purchase a home costing £155,000.

The report also highlighted that the average age of a first-time buyer, who doesn’t take up financial assistance from family members, was 37 years old.

Stewart Baseley, executive chairman of the HBF said: “First-time buyers – the life-blood of the housing market – are almost entirely shut out”.

He added: “We desperately need an increase in lending and a properly functioning and sustainable mortgage market”.