British house prices fell at the fastest monthly pace on record in May to stand 4.4%lower than a year earlier, a survey shows today in a clear signal the property market downturn is gathering speed.
The Nationwide Building Society said house prices fell 2.5% this month, more than four times the rate of decline forecast by analysts, after a 0.9% fall in April.
House prices have now fallen for seven months in a row - the longest consecutive period of monthly house price falls since 1992, when Britain was emerging from recession.
'The pace of house price falls accelerated in May as more weak economic news added to the gathering momentum of negative sentiment in the housing market,' said Fionnuala Earley, chief economist at the Nationwide, Britain's second largest mortgage lender.
May's fall was the largest monthly decline since Nationwide began compiling data in January 1991 and is bound to spark concern that a housing market slowdown, which the Bank of England has said is necessary, is turning into something much more serious.
In a country where two-thirds of people are homeowners, house prices correlate closely with consumer sentiment and a sharp downturn will add to headwinds for the economy and pressure on Prime Minister Gordon Brown, whose popularity has slumped in recent months.
The annual rate of decline was the sharpest since December 1992, the tail-end of Britain's last recession. The price of a typical house is now £173,583 sterling, around £5,000 less than in April.
Nationwide noted that house prices were still 10% higher than three years ago and most homeowners were still sitting on comfortable equity cushions. However it suggested the Bank of England may need to cut interest rates 'sooner than markets currently expect'.
