In yet more gloomy statistics, UK house prices have fallen for an 11th consecutive month, dropping by 1.7% in September, according to figures compiled by Nationwide.

The figures show a 12.4% annual drop in prices, pushing the cost of the average UK home down to £161,797, more than £200,000 less than a year ago.  

Nationwide said the pace of house price falls had stabilised, but warned the next year or two will be difficult.  

One piece of good news its that the rate of fall, which was the same as in August, has remained relatively unchanged in the past three months.  

In the long-term there is no reason why house prices will not continue to grow in real terms even though there is a sharp correction now. How long the correction lasts and how deep the fall in prices is depends largely on market sentiment.

The Council of Mortgage Lenders suggested this week that predicting the short term course of house prices is futile.  

Interestingly, house price rises had been so rapid in recent years, that prices are now only back to the same level as the third quarter of 2006.

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