The number of homes sold during 2008 has fallen to the lowest level since 1974 after a record 14.6 per cent decline in annual house prices in October.

Nationwide Building Society said today that house prices fell by 1.4 per cent in October compared with September, bringing the annual decline down to levels not seen since comparable records began in 1991.

October's decline is the twelfth consecutive fall in house prices and reduced the average price of a property in Britain to £158,872, almost £30,000 lower than their peak a year ago.

Nationwide said homes were now taking 60 per cent longer to sell than a year ago and turnover rates had fallen to their lowest level since this series began in 1974.

Fionnuala Earley, Nationwide’s chief economist, said the low level of turnover of homes — lower even than in the last property slump in the early 1990s — showed that people were waiting for prices to drop further before buying, and that perhaps sellers were still not feeling the pressure to cut asking prices.

“A looming recession and continued financial market instability have uncomfortable implications for the housing and mortgage markets, and will undoubtedly affect the pace of recovery in house prices,” she said.

Money markets show investors are betting that UK interest rates, currently at 4.5 per cent, could be cut to 2.5 per cent or below by this time next year. The Bank of England's Monetary Policy Committee will meet next week before making an announcement on Thursday on borrowing costs.

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