House prices fell by 2.2% in October bringing the annual decline to a record 15%

The record drop from October 2007 is the largest fall since the Halifax house index began in 1983.

Prices fell 2.2% since September, the ninth straight monthly decline. Halifax's measure of annual price changes, which compares figures from the last three months with the same period last year, showed a smaller fall at 13.7%, but this is also the biggest on record.

Martin Ellis, chief economist, said: ‘House prices declined by 2.2% in October. Housing market conditions remain challenging in the face of the significant pressures on householders' incomes and the reduction in the availability of mortgage finance since last summer.

But housing affordability is improving significantly. The house price to average earnings ratio has fallen below 5.0 for the first time for four and a half years. We expect a further improvement in the ratio over the coming months.'

Simon Rubinsohn, RICS chief economist said: 'The latest data from Halifax demonstrates the increasing pressure in the housing market. Prices are now falling at a faster pace than in the recession of the early 90's and, with mortgage finance still in short supply, the likelihood is that the picture will continue to deteriorate in the near term.

'Interest rate cuts by the Bank of England should gradually provide some support but the key issue is the extent to which these reductions are passed on into high street lending rates. Ominously some lenders are taking advantage of the current environment to rebuild margins, which will inevitably lessen the beneficial impact of the bank's actions.'