The latest house price index from Nationwide saw house prices falling by 1.7% in September, although the three-month-on-three month figures remain unchanged which may indicate some level of stabilisation in the pace of change in prices.

The mortgage lender also pointed out that the correction currently underway is something which needs to be taken in the context of longer term trends: ‘It’s clear that market conditions can change very quickly but this is not so unusual. Nationwide has been measuring house prices since the 1950s and during that time there have been several cycles of rapid acceleration and rapid cooling of house price growth,’ said chief economist Fionnuala Earley.

‘One benefit of having such a long running data series is that we can clearly see that price movements at any particular point in time do not tend to say much about the long run trend.  And, price movements from the peak to a trough of a cycle simply show the extent of the volatility in prices around the trend rather than anything more meaningful about their future path.

‘The long-run trend growth in real house prices in the UK is around 2.7% per annum and there is no reason to expect that over the longer term house prices should not continue to go up in real terms, even if we are going through a sharp correction now.’

In terms of where the market is heading, Ms Earley says that because of the link between consumer sentiment and the number of house purchase approvals, we need a significant shift in attitude towards the market from would-be vendors and buyers before we begin to see any real recovery in activity and therefore house prices.

The report also points out how far house prices have grown in the past decade, and that in the overall context, although things seem far from ideal, the eventual levelling out will benefit everyone: ‘House prices now are over 60% higher in real terms than they were at the start of the decade, even taking into account the falls since last October. Even if prices fall over the next couple of years, at the trough that would still leave prices more than a fifth higher in real terms than at the start of the decade.

‘Although price falls are not painless, they do contribute to restoring housing affordability to more sustainable levels, which is positive for the market over the long term. Although the next year or two will be difficult, over time the global economy will recover from current difficulties, helping to end the cyclical downturn in property markets.’