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House prices record 'biggest drop for 15 years'

House prices fell by 2.5 per cent last month, a new survey from Halifax suggests.

This marks the biggest single drop for 15 years - and provides further evidence that the global credit crunch is severely affecting the housing sector in the UK.

The latest figures also drag the annual inflation rate down - with the average property now costing £191,556, just 1.1 per cent more than this time last year.

Analysts had previously predicted a monthly fall of 0.4 per cent - and the previous month's survey had also marked a dip of just 0.3 per cent.

Falling prices were shown by Halifax to be in certain regions only - with property costs in London and East Anglia, for example, still on the up.

However, this was counterbalanced by still sharper falls elsewhere - with house prices falling by five per cent in the West Midlands and by 4.7 per cent in Wales.

Chief economist at the loans lender, Martin Ellis, said: "We expect there to be a modest (low single digit) decline in UK house prices this year.

"Any declines, however, should be viewed in the context of the significant price rises over recent years."

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