House prices has fallen by 1.4% this month according to a new report by the Nationwide Building Society.

The price of a typical house is now £158,872, almost £30,000 less than a year ago. Sellers are reluctant to reduce asking prices and this could be hindering market activity.

Fionnuala Earley, Nationwide's Chief Economist, said: "House prices in the UK fell for the twelfth consecutive month in October. The price of a typical house is now 14.6% lower than at this time last year, the peak of the market.

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"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. However the speed of the economic slowdown and the determination on the part of central banks to return stability to the financial markets does mean that interest rates are likely to continue to be cut sharply which will make life easier for borrowers on variable rate loans and those coming to the end of fixed rate deals. The half percentage point reduction in October will not be the last rate cut of 2008 and the possibility of even deeper cuts this year is increasing as the Bank of England attempts to prevent a deep and prolonged recession."

(CD/JM)