House prices are continuing to fall during January, by a further 1.3% according to figures released by the Nationwide.

January's decline leaves the average price of a typical house at £150,501, down 16.6% from a year ago.

Mortgage approvals for house purchase also fell to a record low of 27,000 in November, and partial figures for December suggest there has only been a small improvement since then.

Commenting on the figures Martin Gahbauer, Nationwide's Senior Economist, said: "House purchase approvals have historically been a good lead indicator of house price movements, and we would not expect to see a stabilisation of property prices until approvals recover significantly from current levels. In the past approvals have tended to move in line with new buyer enquiries and approvals has broken down, with buyer enquiries recovering quite strongly in recent months while approvals have shown little sign of recovery.


"Historical experience suggests that interest rate cuts typically take 18-24 months to feed through into the wider economy, soit is certainly still too early to claim that they are having no effect.

"While none of these stimuli change the short-term picture for the economy, they do provide the path for a future recovery out of recession. Although this is still some way off, it would undoubtedly improve the outlook for the housing market."

(CD/JM)