So house prices dropped a further 1.7% in July according to Halifax (HBOS). For those concerned about the depth of any correction in the housing market that will be worrying.

Added to the other eight monthly falls there have been over the past 12 months that means on the Halifax “smoothed” measure that the average house price has fallen 8.8% on a year ago. That makes the figure more worrying still.

I hasten to add at this point that for those keen to see house prices plummet – the vast band of potential first time buyers among them – this may be seen as good news.

But depending on how you want to look at the figures this months data can be seen as the worst ever for those with a vested interest in stable or rising house prices, surpassing the early 1990s by some margin.

But first a few points of comfort, perhaps:

Average house prices will bundle in a smattering of basket cases, such as the flats bought by unwittingly silly investors that are now worth a fraction of their supposed “market value” at purchase. Given the volume of such purchases and the anecdotal evidence of the collapse in prices, this could be one factor for the sharp falls in the average, suggesting that other houses have held their price better.

Average house prices take account of “pressured” sales, where the seller needs to sell, as well as “considered” sales, where the seller had more time to wait for the “right offer” to come along. One assumes, rightly or wrongly, that there will be in a declining market a higher proportion of “pressured” sales. The net effect will be to deflate the average price figure.

Average house prices are quite rightly measured differently and manipulated differently by each group of statisticians operating each different index to reflect as fairly as possible in their minds a like-for-like balance. Without delving into the methodology closely they will all have different meanings and make different assumptions – for better or worse.

So we shouldn’t get too hung up on average house prices in their detail.

However, they will have some meaning and will also inform the expectations of buyers and sellers, so they shouldn’t be ignored if you are trying to work out where house prices may head from here.

The Halifax index is regarded as a benchmark and afforded wide credibility as a reasonable assessment of where the UK housing market is in terms of price. Launched in 1984, you can download historical data back to January 1983, when incidentally the average house price was put at £21,227. This provides us with a reasonable reference to what happened in the 1990s housing crash.

What is interesting about the falls we are seeing now is that they have gathered pace far faster than in the 1990s. Then prices gently drifted off peak for about 18 months before a sharp decline that began around the autumn of 1991.

Using the cruder non-seasonally adjusted prices, the figures suggest house prices fell on an annualised basis of 8.7% at their steepest. This was in the autumn of 1992, some while after price had started to fall. In the winter of 1992 the pace of decline eased and prices continued to drift more or less slowly downward for another four or so years.

Using the same dataset the recorded annual rate of decline in nominal prices to this July was 11%. Prices having fallen 11.3% from their peak in August last year – so you might expect next month’s figures to show an even steeper decline.

That is measuring things in terms of nominal prices. You get a very different picture if you factor in inflation, which was raging in the late 1980s and first 18 months of the 1990s, before it eased.

In “real” terms that means house prices corrected fairly sharply in the early part of the first few months of the 1990s. Reaching a rate of decline of a 12.4%, using crude mathematics and RPI as the inflation measure.

But even adding in the effects of inflation, the pace of decline registered in the latest Halifax figures outstrips that of the early stages of the house price correction in the 1990s. It comes in at a “real” rate of decline over the past year of 15.6%.

So this does rather suggest that these are the worst Halifax figures we have ever seen – that is if you don’t want a sharp correction in house prices.

Looking forward we have yet to see the impact of the extraordinary move by Government to put into play the stamp duty card. It has been widely seen as extreme folly and there are real fears that the effect might be to slow property transactions further as buyers wait to see what concrete moves the Government makes.

The one silver lining, if you like your humour black, is that the now inevitable correction will happen faster and so hopefully may be shorter lasting. The pros and cons of which we discussed before.

Certainly, the figures appear to be pointing to a very rapid correction indeed, in as much as they mean anything.