Average house prices fell by 1.4% in October, slightly less than the 1.5% fall in September, but annual house price falls now stand at -14.6% from last October, when the market peaked.

The price of a typical house is now £158,872, almost £30,000 less than a year ago the report states, although it also points out that this is still £30,000 more than five years ago.

House purchase approvals have now dropped to new lows in the third quarter of the year at around a third of the long run trend and time taken to sell property has increased by more than 60% in the past year.

A stalemate seems to have developed between buyers and sellers, where sellers are refusing to drop prices, but buyers won’t pay full asking price because prices are still expected to drop further before they pick up.

‘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,’ said chief economist Fionnuala Earley. ‘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. We believe rates will be cut by at least 50bp in the last two months of this year, but would not rule out larger moves, particularly if further co-ordinated action by central banks is warranted.’