House prices fell last month at their longest sustained rate since 2000, according to the Nationwide Building Society, which declared the decade-long boom in house prices was officially over.
Prices eased half a per cent, from £180,473 to £179,358, the fourth monthly decline – the first time there has been such a long run of falls since the beginning of the millennium.
The country's biggest lender said the reduction of more than £1,000 from an average property means that prices have slid 2.3 per cent since the beginning of last November.
Nationwide indicated that harder times have finally tamed runaway property prices, which have trebled in the space of 10 years. "Overall, it seems clear that we will not see recent rates of growth, in either the UK economy or housing market, repeated for some time," its chief economist, Fionnuala Earley, said yesterday.
Tighter lending conditions combined with historically high prices are making it harder for people to buy homes, thereby lowering demand and ultimately prices.
The fourth biggest lender, Lloyds TSB, became the latest to withdraw its 100 per cent mortgage yesterday, blaming the "competitive environment in which all lenders are operating".
Lloyds will continue to offer mortgages of up to 95 per cent of a home's value, but customers of its Cheltenham & Gloucester subsidiary will need a deposit of at least 10 per cent.
Lenders have staged a mass withdrawal from the riskiest end of the market and all six groups that had offered 125 per cent loans pulled them last week.
A glimmer of light was provided to estate agents with a slight rise in the number of mortgage approvals. Although still 40 per cent lower than the same time last year, the total of new residential mortgages was 74,000 in January, 2,000 up on December, according to the Bank of England. The Nationwide's figures are gloomier than the 0.9 per cent rise recorded by the Land Registry in England and Wales in January. Nationwide said the fall had been expected, given the sharp fall in mortgage approvals since the autumn.
Howard Archer, chief UK economist at Global Insight, predicted house prices would fall 5 per cent this year.
Scrapped 125 per cent loan last week, but still offers 100 per cent mortgage.
* Nationwide Building Society
Buyers with less than a 25 per cent deposit have to pay higher interest.
* Alliance & Leicester
Ended 125 per cent mortgage last week. Demands a 10 per cent deposit.
* Northern Rock
Withdrew 125 per cent loan. Minimum 5 per cent deposit.
* Cheltenham & Gloucester
Ended its 100 per cent mortgage yesterday. Buyers now need 10 per cent deposit.
* Bradford & Bingley
Still offers 100 per cent loan.
Source: Independent/MoneyfactsReuse content