The price of houses sold at auction has fallen by almost a quarter during the past year, according to figures highlighted by the Liberal Democrats.

The average price of the 3,993 houses sold by auction between June and August this year was £130,400 – 23.4 per cent lower than the £170,300 average achieved during the same period last year.

Matthew Oakeshott, the Liberal Democrat Treasury spokesman, said: “These dramatic figures show just how fast house prices are falling at the sharp end. The consensus view is that the decline in house prices over 2008 and 2009 will be around 15 to 20 per cent. Property professionals are now factoring in this fall when buying.”

Richard Morea of London and Country, the mortgage broker, said: “Properties sold at auction could include the increasing number of repossessed houses or those being sold because of probate or a divorce settlement. People who are desperate to sell simply have to take a sizeable cut at the moment.

“For buyers, there are definitely some bargains available at auction, and buy-to-let landlords and developers will no doubt be snapping up these properties, especially if they are cash buyers.

“For other buyers, such bargains are only feasible if they can find the right mortgage. Although lenders have been steadily cutting their rates in recent weeks, the best rates are still only available if you have a sizeable deposit — usually at least 25 per cent of the property’s value.”

In the latest round of price-cuts, Nationwide Building Society today announced its third mortgage rate cut in six weeks. Its new range of two-year fixed rates, with a fee of £999, are at 6.28 per cent for those with a 10 per cent deposit, 5.83 per cent for a 25 per cent deposit, and 5.73 per cent for a 40 per cent deposit.

Yorkshire Building Society is cutting its Fresh Start mortgage range, aimed at people who are divorced or separated, by 0.5 per cent, while it is also reducing fixed-rates by 0.15 per cent. Borrowers with a 25 per cent deposit can now fix at 5.59 per cent for two, three, five or 10 years. Arrangement fees have also been reduced to £495 from £995.

The Co-operative Bank is cutting the cost of its three and five-year fixed-rate mortgages for people borrowing 75 per cent of their home’s value by 0.3 per cent and 0.7 per cent respectively from September 15.

Lord Oakeshott said: “The Government must do far more to empower housing associations and councils to buy unsold homes and land, which would save our building industry from collapse. The Government must also act to ensure the banks only use repossessions as last resort.”

But Michael Coogan, director general of the Council of Mortgage Lenders, said: “Lenders must and do see repossession as a last resort.

“We are committed to providing information to borrowers in arrears to help explain the arrears management process, to help borrowers understand what to do and expect, and to set out how their lender will treat them fairly.”

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