House prices fell for the eighth month in a row during June, while annual growth fell at its fastest rate since the 1990s crash, figures showed today.
The average cost of a home in the UK slid by 0.9 per cent during the month to stand at £172,415, while annual house price inflation slumped to minus 6.3 per cent, the lowest level since December 1992.
The housing market downturn has now wiped 7.3 per cent, or £13,500, off the value of homes compared with their peak in October last year, with prices falling by 6.4 per cent since the beginning of 2008, according to Nationwide Building Society.
Nationwide said the pace of price falls had slowed "significantly" during June, following May's 2.5 per cent dive, adding that prices were still 4 per cent higher than they were two-years ago.
But figures from the Bank of England released yesterday showed that mortgage approvals for house purchases had slumped to a record low, suggesting there are further falls to come.
The Bank said just 42,000 new loans were approved for people moving during May, 28 per cent below April's level and 64 per cent down on the figure for the same month of 2007.
Economists, who branded the data "absolutely dire", warned that the current housing market correction could be worse than previously thought.
Government figures released last month showed that transaction volumes fell by 37 per cent during May compared with the same month of 2007, while the Land Registry said the latest figures on house sales showed that they were running at half last year's level.
Fionnuala Earley, Nationwide's chief economist, said: "The tightening of credit conditions over previous months along with changing expectations of house price growth and a general weakening in consumer confidence in the economy have hit mortgage demand and led to a severe slowing in the levels of housing market activity."
She said transactions were a key driver of house prices.
She added: "With house purchase transactions so far below their long term trend it seems unlikely that there will be any rapid turnaround in housing market fortunes in the coming months.
"However, as prices continue to fall affordability measures become more favourable for those in a well financed position to be able to buy."
Britain's biggest mortgage lender Halifax recently increased its forecast for house price falls during 2008 to 9 per cent, while Capital Economics is expecting drops of 15 per cent to 20 per cent this year, with price declines continuing into 2010, and Global Insight expects homes to lose 24 per cent of their value compared with their 2007 peak.Reuse content