British house prices fell for an eighth straight month in June to stand more than 7 per cent below the peak hit last year, according to a survey this morning which is likely to fan fears the market is on the verge of a crash.
The Nationwide building society said prices fell 0.9 per cent last month after a 2.5 per cent drop in May which had been the sharpest fall since the series began in 1991.
House prices have been falling non-stop since peaking last October at an average 186,044 pounds, according to Nationwide data, and stood 6.3 per cent lower than a year ago in June, the weakest annual rate since December 1992.
Economists say the housing market can only get bleaker this year due to weak demand, tighter lending conditions and a slowing economy. Bank of England policymaker David Blanchflower has even warned of a 30 per cent slide in house prices.
"The tightening of credit conditions along with changing expectations of house price growth and a general weakening in consumer confidence in the economy have led to a severe slowing in housing market activity," said Fionnuala Earley, Nationwide's chief economist.
Bank of England data yesterday showed lenders approved the lowest number of new home loans on record - just 42,000 - in May and some analysts say prices could drop by as much as 20 per cent this year.
Banks have been forced to toughen up their mortgage terms because a global credit crunch has made financing more expensive, and Britons are facing rising living costs and muted wage growth.
However, the BoE is unlikely to support the housing market by cutting interest rates in the near future because inflation is at its highest level in more than a decade.