UK house prices dropped for the 11th month in a row, dropping by 1.7 percent in September, according to Nationwide. The cost of the average home now sits at £161,797, more than £20,000 less than a year ago.

Nationwide said the pace of house price falls had slowed, but warned that the next one or two would be “difficult”. House prices are down year-on-year across the UK, with southern England seeing the worst drop. However, the rate of fall has remained relatively unchanged in the past three months.

Fionnuala Earley, Nationwide’s chief economist said that, “Casting back one year, there have been some astonishing and unpredictable developments in the housing and financial markets”.

But she added hat house prices would not continue to grow in real terms, in the long-term, even though there was a “sharp correction” now.

Exactly how long the correction goes on for and how deep the fall in prices is depends largely on sentiment, as well as an end to the turmoil in the financial markets, she says.

Ms Earley’s analysis comes a short time after the Council of Mortgage Lenders suggested that predicting the short term course of house prices was “futile”.

Nationwide has also released figures showing prices during the third quarter of the year in different areas of the UK.

She said that a distinctive feature of the July to September period was the accelerating fall in house prices in the south of England compared with the north.

Four of the six regions that have double-digit price declines were in the South with East Anglia and the South West showing the biggest annual drops – both 11.4 percent. Northern Ireland has suffered the most dramatic decline across the UK, with house prices there 29.8 percent lower than a year ago, but the price rises had been so fat in recent years, that prices are now back to the same level as the third quarter of 2006.

In Scotland, house prices dropped by 5 percent – bigger than the UK average of 4.6 percent. Wales recorded the smallest fall in prices with a three month fall of 1.9 percent in July to September.