Not since the housing slump of 1992 have UK house prices been knocked this hard, with the average price of a UK home falling by 2.5 percent to 191,556 pounds from February.

A recent report by HBOS Plc has revealed that as the global credit squeeze has forced banks and lenders to withdrawal mortgage offers, this has further affected property prices.

The 1 percent drop experienced in the first quarter id the biggest drop since 1995.

George Buckley, chief U.K. economist at Deutsche Bank AG in London has stated that the country is in for a long period of falling prices, or stagnation at best.

This coupled with the fact that the Bank of England may cut interest rates this week will make it an even more difficult period for potential buyers, as the BoE aims to reduce the economic slump.

Abbey which is part of Spain’s Banco Santander SA, today joined ranks with the rest of the major British lenders who have now all withdrawn their 100 percent LTV loans, as the rising cost of credit has reduced the banks ability to lend.

Following speculation of the end of the property boom, the shares of U.K. property companies also felt a squeeze as the UK’s largest home builder Taylor Wimpey Plc, declined as much as 3.8 percent, whilst Barratt Developments Plc fell 6.1 percent.

In the current period of instability buying a house especially for those making their first step on the property ladder is now an even more daunting task as the financial commitment in made even grater in a period of falling prices.

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