British house prices fell for an eighth month in a row in June to stand more than 7% below the peak hit last year, according to a survey today which is likely to fan fears the market is on the verge of a crash.
There were also bleak figures from Britain's manufacturing sector.
The Nationwide building society said house prices fell 0.9% last month after a 2.5% drop in May which had been the sharpest fall since the series began in 1991.
UK house prices have been falling non-stop since peaking last October at an average £186,044 sterling, according to Nationwide data, and stood 6.3% lower than a year ago in June, the weakest annual rate since December 1992.
Economists say the housing market can only get bleaker this year due to weak demand, tighter lending conditions and a slowing economy. Bank of England policymaker David Blanchflower has even warned of a 30% slide in house prices.
'The tightening of credit conditions along with changing expectations of house price growth and a general weakening in consumer confidence in e economy have led to a severe slowing in housing market activity,' said Fionnuala Earley, Nationwide's chief economist.
Bank of England data yesterday showed lenders approved the lowest number of new home loans on record - just 42,000 - in May and some analysts say prices could drop by as much as 20% this year.
UK banks have been forced to toughen up their mortgage terms because a global credit crunch has made financing more expensive, and Britons are facing rising living costs and muted wage growth.
However, the BoE is unlikely to support the housing market by cutting interest rates in the near future because inflation is at its highest level in more than a decade.
Separate figures showed that Britain's manufacturing sector contracted in June at its sharpest pace since 2001.
The CIPS/Markit purchasing managers' index fell to 45.8 in June from a downwardly revised 49.5 in May, well below expectations.
Declining activity led companies to lay off workers at the fastest pace since August 2005, suggesting tougher trading conditions have started to hit the labour market.
