The three month rate of decline accelerated to 1.5%. Natiownwide suggests further quantitative easing could boost the housing market. Quantitative easing has the effect of lowering the cost of government borrowing. The cost of fixed rate mortgages is closely linked to the interest rates on government bonds, the policy would contribute to lowering the cost of borrowing for homebuyers taking out new mortgages.
Commenting on the figures Martin Gahbauer, Nationwide’s Chief Economist, said:
“October saw a continuation of the modest downward trend in house prices that began at the start of the summer. The average price of a typical UK property edged down by a seasonally adjusted 0.7% month-onmonth in October. The three month on three month rate of change – a smoother indicator of the recent price trend – fell to -1.5% in October from -1.0 % in September.
"This is the largest decline over three months since April 2009, but is still well below the 5- 6% rates of decline on the three month measure seen during the second half of 2008. The annual rate of change – which compares the current level of house prices against their level twelve months ago – declined from +3.1% in September to +1.4% in October.
"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. This would compare to a rate of +5.9% at the end of 2009.
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