Fall in house prices in UK slows in November

House prices fell 0.4 per cent this month as the credit crisis continued to hit the housing market, but the annual rate of decline eased slightly from last month's record drop, a survey showed on Thursday.

The Nationwide building society said house prices were 13.9 per cent lower than a year ago in November at an average £158,442 - a fall of more than £25,000. Last month, they were 14.6 per cent down on the year.

November's monthly drop was the smallest since house prices started falling in November last year. They rose 1.2 per cent in October last year.

Nationwide revised up last month's reading to show a 1.3 per cent fall over the month, compared with a previously reported 1.4 per cent decline.

The figures may be taken as a sign that the housing market could be slowly improving following the government's bank rescue plan, support measures and the Bank of England's 1.5 percentage point interest rate cut, but analysts at Nationwide were cautious.

Most economists expect the market to remain extremely weak for some time as Britain goes through its first recession since the early 1990s.

"Ongoing, very tight credit conditions, still relatively stretched housing affordability on a number of measures, recession, faster rising unemployment and widespread expectations that house prices are likely to fall a lot further, form a powerful set of negative factors weighing down on the housing market," said Howard Archer, economist at IHS Global Insight.

Construction firms have been suffering as tight credit and falling prices have hurt sales.

"With the economy in recession, conditions do not appear very favourable for a swift recovery in the housing market," said Fionnuala Earley, Nationwide's chief economist.

"The labour market is weakening, which will inevitably hinder market demand, particularly when property remains expensive relative to earnings."