House prices have recorded their largest monthly fall since 1991, says the Nationwide building society.
House prices have recorded their largest monthly fall since 1991, says the Nationwide building society.
Prices have fallen by 2.5% during May, according to its latest monthly survey.
Prices have fallen by 2.5% during May, according to its latest monthly survey.
The lender said prices were now 4.4% lower than a year ago, a fall of £8,000 which has taken the average UK house price down to £173,583.
The lender said prices were now 4.4% lower than a year ago, a fall of £8,000 which has taken the average UK house price down to £173,583.
The Nationwide, the UK's second-largest lender, said price falls were now accelerating and had continued for seven months in a row.
The Nationwide, the UK's second-largest lender, said price falls were now accelerating and had continued for seven months in a row.
"The pace of house price falls accelerated in May as more weak economic news added to the gathering momentum of negative sentiment about the housing market," said Fionnuala Earley, the Nationwide's chief economist.
"The pace of house price falls accelerated in May as more weak economic news added to the gathering momentum of negative sentiment about the housing market," said Fionnuala Earley, the Nationwide's chief economist.
"At seven months, this is also the longest consecutive period of monthly falls since 1992," she added.
"At seven months, this is also the longest consecutive period of monthly falls since 1992," she added.
Low point
Low point
The Nationwide pointed out that its survey chimed closely with much of the other recent evidence about the state of the UK housing market.
The Nationwide pointed out that its survey chimed closely with much of the other recent evidence about the state of the UK housing market.
A much smaller proportion of borrowers face the full effect of falls in prices than was the case in the 1990s Fionnuala Earley, Nationwide
A much smaller proportion of borrowers face the full effect of falls in prices than was the case in the 1990s Fionnuala Earley, Nationwide
In March, new mortgage approvals for home buyers were at their lowest since the Bank of England's records on the topic began back in 1993.
In March, new mortgage approvals for home buyers were at their lowest since the Bank of England's records on the topic began back in 1993.
And recently, estate agents have reported that falling prices have been at their most widespread across the UK since 1978.
And recently, estate agents have reported that falling prices have been at their most widespread across the UK since 1978.
Despite this, Ms Earley argued that the market was not heading for the same sort of crash as that seen in the early 1990s.
Despite this, Ms Earley argued that the market was not heading for the same sort of crash as that seen in the early 1990s.
"First, fewer homeowners bought at the top of the market in this cycle," she said.
"First, fewer homeowners bought at the top of the market in this cycle," she said.
"This means a much smaller proportion of borrowers face the full effect of falls in prices than was the case in the 1990s.
"This means a much smaller proportion of borrowers face the full effect of falls in prices than was the case in the 1990s.
"Secondly, today's borrowers have typically put down a larger deposit than their 1980s counterparts," she added.
"Secondly, today's borrowers have typically put down a larger deposit than their 1980s counterparts," she added.
Further falls?
Further falls?
After a boom lasting for more than a decade, house price inflation took a decisive turn downwards last autumn.
After a boom lasting for more than a decade, house price inflation took a decisive turn downwards last autumn.
The market has collapsed under the twin impact of two pressures.
The market has collapsed under the twin impact of two pressures.
Prices became so high that most first-time buyers were priced out of the market, and the effects of the credit crunch has dried up the supply of money for new mortgages.
Prices became so high that most first-time buyers were priced out of the market, and the effects of the credit crunch has dried up the supply of money for new mortgages.
Lenders are now expecting that fresh mortgage lending will shrink by about 40% this year, despite the efforts of the Bank of England to inject more money into the banking system.
Lenders are now expecting that fresh mortgage lending will shrink by about 40% this year, despite the efforts of the Bank of England to inject more money into the banking system.
Ms Earley said that Nationwide was continuing to forecast single-digit house price falls during 2008.
Ms Earley said that Nationwide was continuing to forecast single-digit house price falls during 2008.
But Howard Archer, chief UK economist at Global Insight, painted a gloomier picture for homeowners.
But Howard Archer, chief UK economist at Global Insight, painted a gloomier picture for homeowners.
"It now looks more likely than not that house prices will suffer double-digit falls both this year and in 2009," he said.
"It now looks more likely than not that house prices will suffer double-digit falls both this year and in 2009," he said.
He said this was a result of serious buyer affordability constraints, limited and often more expensive mortgages available because of the continuing tight lending conditions, a deteriorating economic outlook, and reduced prospects for further interest rate cuts in the near term.
He said this was a result of serious buyer affordability constraints, limited and often more expensive mortgages available because of the continuing tight lending conditions, a deteriorating economic outlook, and reduced prospects for further interest rate cuts in the near term.
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