House prices dived by a record 15 per cent during the past year, according to the Halifax.

The value of property tumbled by a further 2.2 per cent during October as the market continued to be squeezed by the mortgage drought.

The latest fall left the average home costing £168,176, down from around £197,698 in October last year.

The monthly fall was the biggest drop since May, and well up on September's slide of 1.3 per cent.

Annual house price inflation, which measures prices during the previous three months compared with the same period a year ago, also dropped to a new record low of 13.7 per cent.

Halifax chief economist Martin Ellis said: "Housing market conditions remain challenging in the face of the significant pressures on householders' incomes and the reduction in the availability of mortgage finance since last summer."

But he added that housing affordability was improving "significantly" with the house price to average earnings ratio dropping below five for the first time in four-and-a-half years.

This key affordability measure has now fallen by 16 per cent from its peak in July last year, when house prices were 5.84 times higher than average earnings, to stand at 4.92 in August.

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