House price growth fell for the second month in a row, Halifax says
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Evidence of a slowdown in house prices has come from the UK's biggest mortgage lender, the Halifax.
Its latest monthly survey says prices fell by 0.5% in October, taking the annual rate of inflation down from 10.7% in September to 8.9% last month.
The results contradict the latest research from Nationwide, which showed prices picking up during October.
The Halifax calculates the average residential property across the UK now costs £197,248.
House prices dropped for the second month in a row, the first time there have been consecutive falls since April and May 2005.
Overall, prices in the three months to October were 0.3% higher than in the previous quarter.
Halifax said the latest falls in annual price growth continued the "steady downward trend" which has been evident since the end of 2006.
Mixed picture
"The rise in interest rates since August last year and negative real earnings growth so far this year are curbing housing demand, leading to a slowdown in both price growth and activity," said chief economist Martin Ellis.
But Halifax argues a mixed pattern of monthly price rises is a "typical feature of a more subdued market", and does not signal a wider crash.
"The UK economy is in a strong position. Sound market fundamentals, including high levels of employment and a shortage in the number of properties available for sale, will continue to support house prices," he added.
Halifax and Nationwide draw different conclusions about house prices
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Halifax's data contrasts with the most recent research from Nationwide. Last week, it published statistics showing what it called a "surprisingly strong" increase of 1.1% in house prices in October.
According to its figures, annual house price growth rose by 9.7% from the same month in 2006, up from September's figure of 9%.
However, Nationwide suggested the rise was a temporary change of direction and said it was "unlikely to mark the start of a new upward trend".
Most other indicators suggest the housing market is continuing to slow down. The Bank of England has reported a fall in mortgage approvals.
New buyer interest in purchasing a house fell for the 10th consecutive month in September, and at the fastest pace for more than three years, according to the Royal Institution of Chartered Surveyors (RICS).
General cooling
The latest analysis of the housing market from PriceWaterhouseCooper suggests prices are 10% "overvalued" when compared against indicators such as average earnings.
It said there was a one-in-three chance of UK houses prices being lower in real terms in 2010 than they are now.
But it supported Halifax's contention that a general cooling of the market was still more likely than "an outright fall in prices".
"A sharp housing market correction is a genuine possibility," said Howard Archer, economist at Global Insight.
"The second successive marked fall in house prices provides late support to the case for the Bank of England to trim interest rates."
But the Bank's Monetary Policy Committee resisted calls for a rate cut, leaving rates on hold at 5.75% for the fourth month.
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The UK economy is in a strong position. Sound market fundamentals...will continue to support house prices
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