British house prices fell at their sharpest rate in at least a quarter of century in October.
Britain's biggest mortgage lender, Halifax, said house prices fell 2.2 per cent in October, the ninth successive decline. That took house prices down 14.9 per cent compared with a year ago, the steepest fall since records began in 1983.
The figures, published before the Bank of England announces its 150bps cut to bring interest rates to 3 per cent had boosted expectations policymakers would slash borrowing costs.
"The Halifax numbers are horrendous," said George Buckley, chief UK economist at Deutsche Bank. "
Earlier this week, mortgage lender Abbey announced it was raising rates on some home loans and HSBC has said it expects some "stickiness" by banks in passing on forthcoming rate cuts.
Prime Minister Gordon Brown has urged banks to pass on any interest rate cuts to consumers, but economists say lower rates will not be enough to halt a slide in the housing market.
Halifax reckons house prices have fallen 15.7 per cent from their peak, meaning that hundreds of thousands of homeowners may already be in negative equity - where their mortgage exceeds the value of their home.
"This housing market correction has already overtaken the 1990s crash and, with the economic slump deepening, it is set to get worse," said Sheema Shah, property economist at Capital Economics. "Interest rate cuts will not be enough to stop the correction, nor slow the pace of house price declines."