The decline over the quarter weighed in at -5.2 per cent, very similar to the -5.1 per cent fall over the second quarter, which Halifax suggests may be a sign that the pace of the slowdown is starting to stabilise.
Nevertheless, the annual change in house prices stood at -12.4 per cent, taking the average price of bricks and mortar to £172,108.
Affordability Improves
There are now a few glimmers of encouragement for the market as Halifax notes that the house prices to earnings ratio has actually improved.
This measure of affordability slipped to 5.02 in July – the lowest level in four and a half years.
However this has been aided largely by softening prices as opposed to improved earnings.
Indeed, real earnings growth has been unable to match the pace of retail price growth while fuel and food prices have continued to soar. This has put even greater strain on households' available income.
And for house-hunters, the continuing caution exercised by lenders means that they have had to contend with higher mortgage rates, which Halifax averages at 6.1 per cent in August compared to 5.88 per cent 12 months previously.
However, lenders have been more willing to pass on rate cuts to existing borrowers, as here the average mortgage rate has actually fallen from last August's 5.91 per cent to 5.83 per cent.
Rate Cuts Will Help
Martin Ellis, chief economist at Halifax, comments: "The overall price decrease in the three months to September was very similar to that in the previous quarter, indicating that the trend rate of decline may be beginning to stabilise.
"The ongoing pressures on householders' income, combined with the reduction in the availability of mortgage finance, however, mean that market conditions will remain challenging.
"The recent weakening in the economy has alleviated the MPC's inflationary concerns over the coming months sufficiently to provide the scope for yesterday's cut in Bank rate.
"Lower interest rates will help mortgage borrowers faced with increasing pressures on their finances and provide a valuable support to the housing market."
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