House prices have fallen 12.4 per cent in a year, according to the latest data from Nationwide.

The building society’s house price index shows house prices fell by 1.7 per cent in September, the same level as in August.

The price of a typical house in the UK to £161,797, according to Nationwide.

The three-month measure, which is less volatile, has also barely changed, leading Nationwide to suggest the housing market may be beginning to stabilise.

Fionnuala Earley, Nationwide’s chief economist, said: “House prices have now fallen for 11 consecutive months, but the monthly rate of fall has been almost unchanged in the last three months.

“This may suggest the beginning of some stabilisation in the pace of house price falls.”

Ms Earley said the current downturn was a “correction” essential to the market to bring house price growth back in line with the long-term trend.

“The long-run trend growth in real house prices in the UK is around 2.7 per cent 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,” she said.

“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.”

Ms Earley said it was impossible to predict when house prices would start to rise again but said a significant shift in consumer sentiment would be needed, as well as an improvement in the economy – not expected until 2010.

“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.”