New figures published by the Nationwide today show the price of a typical house is £15,000 lower than this time last year.

House prices fell by 1.7% in July, bringing the annual fall to 8.1%.

For the past nine months house prices have been continuing to drop, however on average they are still almost £11,000 higher than three years ago.

Commenting on the figures Fionnuala Earley, Nationwide's Chief Economist, said: "The Bank of England Credit Condition Survey still signals tight credit conditions ahead. 22% more lenders expect that there will be less credit available to households over the next three months and this could limit a recovery in transactions.

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"Estate agents are reporting up to 40% of transactions falling through and the average number of sales per surveyor is at its lowest ever level. This could be partly due to the availability of finance but the Bank of England Agent's report suggests that this may also be due to the reluctance of sellers to accept lower offers. While this does little for liquidity in the housing market, it does indicate that sellers are largely not in a position where they are forced to sell. Overall the weakening economy and poor housing market sentiment do not suggest that the market will recover quickly."

(CD/JM)