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Latest figures from Halifax, the UK’s largest mortgage lender, show a 2.5% fall in UK house prices in March.
The drop is the sharpest in a month since September 1992, and well above analysts’ expectation. It compares with a fall of 0.4% in February.
However, Halifax’s figures show a less marked slowdown in prices than Nationwide’s, which last week recorded a 0.5% drop in prices in February
According to the Halifax data, the three-month rate of house price inflation now stands at 1.1% bringing the average price of a UK home to £191,556.
Martin Ellis, chief economist at Halifax, points out that any decline should be viewed in the context of significant price rises over recent years; the average UK home has risen in value by 171%, or £120,860, over the past decade.
Mr Ellis believes that strong economic fundamentals will continue to support the housing market, preventing an outright crash.
Even taking into account the shrinkage in the mortgage market, economic fundamentals look positive.
Unemployment remains low and further cuts in the base rate this year should help both the economy and potential borrowers.
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