According to the research, house prices fell by 1.3 per cent in April making the average house price £189,027.

Following in the footsteps of Nationwide earlier this week, the Halifax House Price Index also showed an annual house price decrease of 0.9 per cent, the first since the housing slump of the 1990s.

The UK’s largest mortgage lender supported claims that house prices will continue to decline, saying it expected to see a mid single digit percentage decline in UK house prices this year.

However, the bank argued that the price drop should be seen in the context of the house price boom that peaked last year. According to the study UK house prices nearly doubled over the ten years prior to August 2007.

The UK is currently feeling the squeeze as a result of the global credit crunch which began in the US. According to Halifax, the decline in prices is a result of this, and the effect which it has had on spending power. Because of the credit shortage, mortgage lenders have been forced to increase their mortgage rates , consequently pushing people, especially first time buyers, out of the market.

The index commented on the decrease in activity on the housing market and its effect on house prices; according to the data the number of mortgages approved in the first quarter of 2008 was down by 41 per cent from 2007.

Despite the gloom, the Halifax index commented on the relentless growth of the UK economy as a result of high employment rates and low interest rates, but this growth is expected to slow as the UK faces the credit crisis head on.

The index pointed out that regardless of a slowdown, house prices should become more stable than they have been over the last ten years. Commenting on this factor, chief executive of the National Association of Estate Agents (NAEA), Peter Bolton King, said:

“There is no denying that the credit crunch has affected confidence in the market but it is still important to remember that the underlying factors that support the property market remain: low unemployment, historically low interest rates and a pent-up demand for houses.

“Therefore, rather than a dramatic fall that some doom and gloom merchants are predicting, it shows we are looking at a return to a more steady market rather than the fantastic price hikes we have seen in the previous ten years.”

©Fair Investment Company Ltd