The average home
owner saw nearly £5,000 wiped off the value of their home in March as the property market slowdown continued.
The latest house price index from Halifax shows prices fell by 2.5% in March, to an average of £191,556.
The latest fall means the annual rate of house price growth in March was 1.1%.
Not all regions experienced falls. Properties in Greater London rose by 1.6%, while homes in East Anglia and East Midlands increased by 1.4% and 2.2% respectively.
The West Midlands and Wales experienced the biggest falls of –5% and –4.7% respectively.
Halifax is predicting house prices to continue to decline throughout 2008, but says falls will be “modest" and "low single digit".
But Martin Ellis, chief economist at Halifax, says rapid house price growth over the past decade means many households will not feel the decline too keenly.
He also rules out a housing market crash, pointing out that a strong labour market, low interest rates and a housing shortage will continue to support house prices.
Ellis said: "Overall, we expect there to be a modest fall in UK house prices this year. Any declines, however, should be viewed in the context of the significant price rises over recent years. The average UK price has risen by £120,860 during the past decade from £70,696 to £191,556 - an increase of 171%.”
The figures from the UK's largest mortgage lender also show that more buyers are putting down deposits on their homes, with 82% of new borrowers stumping up at least 10% during the final three months of 2007. In contrast, just 56% put down 10% or more in 1989 and 1990.
Other figures out today from mortgage lenders show a subdued level of mortgage borrowing during February.
The Council of Mortgage Lenders says the volume of new mortgages fell by nearly 2,000 in February with the value also declining by 5.1% to £7.5 billion.
However, this fall was partially offset by a high level of remortgaging. The CML says remortgaging made up 45% of all lending in February, and is likely to remain strong for the rest of the year as borrowers come off their fixed and discounted rates.
The figures also show that tracker mortgages increased in popularity in February as borrowers anticipated Bank of England interest rate cuts.
The proportion of fixed-rate loans fell to 52%, its lowest level since March 2005.
Michael Coogan, director general of the CML, said: “The February figures relate to completions of transactions started several months ago.
“More recently, there has been consistent evidence of tightening in lending criteria which will lead to shrinking pipelines of new business.
“We expect this process of further tightening in lending criteria to continue in the second quarter as lenders respond to the challenging market conditions.”
Abbey is the latest lender to respond to tightening conditions in the market, with the withdrawal of its 100% mortgage. This was the last 100% mortgage available on the market.
It is estimated that more than 70% of mortgage deals have disappeared since last summer.