The Nationwide reported yesterday that house prices dropped 0.7% in October.  Bringing the 3 month decline to 1.5%.  On the upside, GDP has been better than expected so this will filter some confidence back into the market for 2011.

The Land Registry also reported that between April and July there was an average of 57,152 sales per month, a long way short of the long-term norm of 80,000 sales a month.??But more house price falls could be exactly what first-time buyers need.

What does this mean?  Director of MMP, Andrew Bald, gives his views:

With transaction levels this low it is set to be a very quiet end to the year for house prices with further monthly declines expected.

On a positive note, prices should stabilise in 2011.  The government spending cuts are now all out in the open and GDP has bounced back stronger than many commentators predicted, both of these should bring some confidence into consumer outlook for 2011.

Sellers are also likely to withdraw properties from the market over the coming months thereby reducing supply, this will help stabilise prices and tip the balance back in the sellers favour by the second half of 2011.

With buyers withdrawing from the market over the next couple of months the silver lining will be a boost for the rental sector with rents likely to remain strong in early 2011.