House prices and new car sales both slump

Mortgage lender Halifax said average house prices fell by 2.3 per cent — nearly £4,000 — last month to £160,327.

The Society of Motor Manufacturers said sales of new cars in February were 22 per cent lower than last year, down from 69,610 to 54,359. It called on the Government to provide the industry with "urgent" assistance.

The fall in house values more than wiped out the surprise rise in January, leaving prices 17.7 per cent lower than a year ago and £39,285 off their August 2007 peak. The last time houses were this low was in August 2004.

Halifax housing economist Martin Ellis acknowledged this would be another difficult year for house prices, but said: "Whilst market activity remains at very low levels, there are some tentative signs that activity may be beginning to stabilise."

Estate agents have reported renewed interest from buyers, although the large deposits that mortgage lenders are demanding have prevented most from buying.

The car industry's plea for state help comes after manufacturers including Jaguar Land Rover, Nissan, Honda and Ford were forced to cut production and jobs in response to the downturn.

General Motors Europe, which owns Vauxhall, has warned it will run out of cash in weeks unless European governments provide support.

Paul Everitt, chief executive of the Society of Motor Manufacturers, is calling for a scrap incentive scheme to persuade people to buy new cars.