UK house prices fell at the sharpest pace in nearly two years last month but worse is to come, the National Association of Property Buyers has warned.

Figures released by Halifax show prices fell 0.4% in October, representing the third decline in four months, while the annual rate of growth fell from 9.8% to 8.3%. Meanwhile, data from Nationwide last week showed prices falling 0.9% – the biggest decline since the start of the pandemic.

Commenting on the figures, Jonathan Rolande of the National Association of Property Buyers observed that although the latest reduction was fairly small – amounting to just over £1,000 off an average home – it followed a 0.1% drop in September and was a sign of the market heading in the wrong direction.

“What really concerns me isn’t this drop itself, but what might lie ahead of us,” Rolande said. “I fear much worse is to come and that house prices will fall further and faster next month.

“In recent weeks the housing market has been rocked by financial events including the fallout from the mini-budget in September [which was] a disaster and led to much higher borrowing rates, but those lucky enough to already have a mortgage in place would have had it honoured at the old, lower rate. 

“Today’s figures don’t yet show the true impact and for that we need to wait two or three more months. I’m concerned that these figures could prove to be worse still.”

Rolande pointed out that although property is still over 8% more expensive than it was a year ago, that could be quickly eroded by further monthly falls.

“We are now in danger of seeing those people who bought property during the summer with homes worth less than they paid,” he said. “Lack of confidence in the market can quickly spiral and price drops can become a self-fulfilling prophecy. 

“I hope that we now have a period of some stability and a measured budget in mid-November that gets the property market back on track.”