British house prices tumbled 3.8% in May for the largest annual drop since April 1993, home loans provider Halifax said today.
Halifax, part of British banking group HBOS, said in its latest monthly survey that house prices felll 2.4% compared with April. The average cost of a property stood at £184,111 sterling in May, it added.
'The decline in prices is caused by the difficulties created for potential house purchasers by the rapid rise in house prices in the last few years, a squeeze on spending power and the reduction in credit availability,' the bank said. 'These factors have curbed housing demand,' it added.
UK home owners are seeing their properties drop in value as banks become less willing to offer mortgages amid a global squeeze on credit caused by the collapse of the US sub-prime or high-risk home loan market.
Halifax said, however, that May's steep price falls should be viewed in the context of significant price gains in recent years - almost 80% in the five years to August 2007.
Property prices fell heavily in May partly because cash-strapped consumers were tightening their belts in the face of higher fuel and food prices, Halifax added.
'Sharp increases in both fuel and food prices over the past year have helped to reduce the discretionary income available to households to fund house purchases,' the bank said.
