2009-01-02 10:33:51
UK house prices declined by 2.2% in December, the Halifax has said.
The monthly fall brings the average price of a UK home down to 159,896, a level last seen in August 2004. Prices were down 16.2% from December 2007.
The Halifax added that against earnings homes were now more affordable than at any time since April 2003.
Its latest figures came as separate data from the Bank of England said mortgage approvals fell in November to 27,000 - at least a nine-year low.
This was the lowest figure since the series began in January 1999.
Subdued
The Halifax said house prices were likely to continue to fall for some time.
"Continuing pressures on incomes and the negative impact of the dislocation of the financial markets on the availability of mortgage finance are expected to exert future downward pressure on the market over the coming months," said Halifax chief economist Martin Ellis.
In monetary terms, mortgage lending rose by 740m in November, but that was still less than a tenth of the amount seen in the same month in 2007.
The figures are the latest indication of the extent of the housing downturn.
The latest fall in mortgage approvals is likely to increase pressure on the commercial banks to start to raise lending levels.
These are still subdued as a result of the financial crisis, despite efforts by the Bank of England to help the banks improve their liquidity.
However, with house prices falling in recent months, and people waiting to see whether mortgages will get significantly cheaper, activity in the mortgage market is likely to remain subdued for sometime.
The number of mortgages approved, but not yet lent, is a good indicator of medium-term trends in lending.