House prices down 4.2 percent

House prices fell at their slowest annual rate since June 2008 in October, dropping 4.2 percent, due to an ongoing lack of housing for sale after the credit crunch, property data company Hometrack said on Monday.

Hometrack's monthly survey of estate agents and surveyors showed that house prices rose 0.2 percent in England and Wales in October on a non-seasonally adjusted basis, the same rate of increase as in September.

However, this rise was largely concentrated in London, where prices rose 0.4 percent, while in 84 percent of postal code areas house prices were static last month, Hometrack said.

The number of new buyers registering with estate agents grew only 1.2 percent, down sharply from an average of 7.5 percent in spring and early summer when many Britons typically start house-hunting.

"The pent-up demand that has boosted the market in recent months is starting to fade in the face of firmer pricing and fewer clear bargains" said Richard Donnell, Hometrack's director of research.

"Looking ahead new buyer registrations are likely to slow further in the coming weeks as we approach Christmas. And with a continuing lack of new housing for sale, prices are expected to remain under upward pressure in the near term."

Low interest rates and a sharp fall in house prices since their peak in late 2007 have made British property more affordable than in many years, but rising unemployment and the difficulty many home-buyers have in finding mortgages have kept a lid on demand.

Hometrack's survey shows weaker recent growth in house prices than that of mortgage lender Nationwide, which said on Friday that prices rose 0.4 percent in October and were up 2.0 percent on the year, based on mortgage approvals.

The Land Registry, whose record of completed transactions lags other surveys, reported that prices rose 0.9 percent in September but were still 5.6 percent down on a year earlier.