House prices in the UK have fallen by 1.1% during the past year according to a report released today by Nationwide Building Society.

This is the first such decline since 1996, as the credit crunch continues to take its toll on the property market.

The average home in the UK now costs £178,555, £1,759 less than 12 months ago.

Nationwide's Chief Economist Fionnuala Earley said: "April was another difficult month for the housing market. Falling levels of market activity meant that prices fell

by 1.1% during the month and ended up 1% lower than this time last year. April's fall in prices continues the trend of the last six months and reflects the weakening sentiment in the market brought about by poor affordability and tighter financial market conditions.

-- Advertisement --

"The latest fall in house prices follows from the steep decline in house purchase transactions over the last half year. As a result of falling demand from first-time buyers, higher mortgage rates and tighter lending criteria, the number of mortgages approved for house purchases has fallen to record lows. The fall in transactions has pushed up the stock of unsold property on the market and improved the bargaining power of buyers, thus pushing down on prices."

The housing market began to calm toward the end of last year after the Bank of England raised interest rates five times between August 2006 and July 2007 and the credit crisis hit the mortgage market.

Yesterday the Bank of England said the number of mortgages approved for house prices had fallen rapidly in March.

(CD/JM)