UK January house prices fall

British house prices fell 1.3 per cent last month, making the average home worth 16.6 per cent less than a year earlier, the biggest annual fall on record, data from mortgage provider Nationwide showed last Thursday.

The monthly drop was slower than the 2.5 per cent recorded in December and slightly less than economists polled by Reuters had expected, but still means house prices are now 18 per cent below their peak in October 2007 at an average of £150,501 .

Nationwide economist Martin Gahbauer said falling prices and interest rates were failing to translate into sales because the deepening recession meant potential home-buyers were too worried about their jobs and still faced difficulty getting mortgages.

"A pre-condition for recovery in the housing market is an end to the deterioration in the wider economy," he said.

After tripling in value since the start of the decade, British house prices have tumbled since late 2007 because of the reduced availability of mortgages and the darkening outlook for the economy.

As well as a slower pace of monthly decline, the four per cent fall in house prices in the three months to January was smaller than the 4.2 per cent decline in the last three months of 2008, but Nationwide was not ready to say the pace of decline was beginning to level off.

"It is too early to say that this marks the start of a sustained improvement in the short-term trend," Mr Gahbauer said.