House prices fell by 2.5% in March, the biggest monthly decline since September 1992, the Halifax has said.
House prices fell by 2.5% in March, the biggest monthly decline since September 1992, the Halifax has said.
The latest monthly figure from the UK's largest mortgage lender was significantly worse than many experts had expected.
The latest monthly figure from the UK's largest mortgage lender was significantly worse than many experts had expected.
House prices are now just 1.1% higher than they were a year ago, the slowest annual growth rate for 12 years.
House prices are now just 1.1% higher than they were a year ago, the slowest annual growth rate for 12 years.
The Halifax has also revised its predictions and now expects prices to fall over the course of this year.
The Halifax has also revised its predictions and now expects prices to fall over the course of this year.
The Nationwide took a similar stance earlier this month after reporting that prices had fallen for five months in a row.
The Nationwide took a similar stance earlier this month after reporting that prices had fallen for five months in a row.
Analysts said that the weaker-than-expected data from the Halifax would raise expectations that the Bank of England would cut interest rates by at least 25 basis points to 5% on Thursday.
Analysts said that the weaker-than-expected data from the Halifax would raise expectations that the Bank of England would cut interest rates by at least 25 basis points to 5% on Thursday.
However, because the lack of liquidity in money markets is making it more expensive for banks to borrow, a rate cut would not necessarily be passed on to mortgage holders, observers say.
However, because the lack of liquidity in money markets is making it more expensive for banks to borrow, a rate cut would not necessarily be passed on to mortgage holders, observers say.
'Adjustment'
'Adjustment'
For the first three months of the year, the Halifax said prices fell by 1.1% to a UK-wide average of £191,556, according to its data.
For the first three months of the year, the Halifax said prices fell by 1.1% to a UK-wide average of £191,556, according to its data.
Using this figure, the average house price fell by £4,912 in March.
Using this figure, the average house price fell by £4,912 in March.
AVERAGE UK HOUSE PRICES October 2007: £197,00November 2007: £194,500December 2007: £197,163January 2008: £197,243February 2008: £196,465March 2008: £191,556 Source: Halifax(seasonally adjusted figures)
But the Halifax's chief economist, Martin Ellis, said that declines in prices "should be viewed in the context of the significant price rises over recent years".
But the Halifax's chief economist, Martin Ellis, said that declines in prices "should be viewed in the context of the significant price rises over recent years".
He added that house prices were still being underpinned by "sound economic fundamentals" including a strong labour market, low interest rates and a shortage of new houses.
He added that house prices were still being underpinned by "sound economic fundamentals" including a strong labour market, low interest rates and a shortage of new houses.
"We are definitely seeing an adjustment in the housing market," Mr Ellis said.
"We are definitely seeing an adjustment in the housing market," Mr Ellis said.
"I am surprised that we have seen a fall of quite this extent but of course we have been seeing some falls in previous months so it's not surprising that there's actually been a decline during the month."
"I am surprised that we have seen a fall of quite this extent but of course we have been seeing some falls in previous months so it's not surprising that there's actually been a decline during the month."
Global Insight chief economist Howard Archer said that too much emphasis should not be put on one piece of data.
Global Insight chief economist Howard Archer said that too much emphasis should not be put on one piece of data.
But he added: "The overall impression is that house prices were buckling markedly under the substantial pressure emanating from increased affordability constraints and markedly tighter lending conditions even before the latest escalation of the credit crunch."
But he added: "The overall impression is that house prices were buckling markedly under the substantial pressure emanating from increased affordability constraints and markedly tighter lending conditions even before the latest escalation of the credit crunch."
Global Insight forecast that house prices would now fall by 7% this year and by 8% in 2009.
Global Insight forecast that house prices would now fall by 7% this year and by 8% in 2009.
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