Capital values across All Property fell by 2.3% in October, according to the latest figures from the CB Richard Ellis (CBRE) Monthly Index.
The fall was the largest decline since the series began in December 2000 and follows a fall of 1.4% in September.
CBRE Research associate director David Wylie said yields edged out across all sectors, but retail was particularly affected.
“The sharp downgrade to property values has been given added impetus from the severe dislocation in credit markets since the summer and in large part can be attributed to the scarcity and cost of debt financing for property transactions,” Wylie said.
“The anticipated normalisation in capital markets should allow property yields and valuations to stabilise during 2008.”
Wylie said rental growth continued at a solid 4.9% annually, but has shown signs of moderating in recent months, compounding the negative yield impact.
Retail warehouse capital values were hardest hit in October, falling 3.5%. Outer London/M25 offices saw a significant correction in prices with declines of 3.1% over the month compared to -1.8% for offices in the capital.
All Property total returns fell 1.8% in October as the correction in commercial property gained momentum amid continuing unease in financial markets.
