House prices fall for third month

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Halifax said it was the first time prices had fallen for three consecutive months since early 1995, while it was the biggest monthly drop recorded since December last year.

The slide pushed annual house price inflation down to 6.3%, its lowest level since March last year.

The figures confirm the slowdown is now well under way, as the market responds to higher interest rates and stretched affordability.

Halifax is currently the only one of the major indexes to report three consecutive months of falling prices, but Nationwide Building Society last week said house prices fell by 0.8% during November - their biggest monthly drop for more than 12 years.

Property information group Hometrack said house prices in England and Wales fell for a second month during November, easing by 0.2%, while website Rightmove said they dropped by 0.7% in the four weeks to November 10.

Wednesday's figures will further stoke speculation among some commentators that the market is now heading for a period of sustained price falls.

But Halifax said a mixed pattern of monthly price rises and price falls was a "typical feature" of a more subdued housing market.

It said between July 2004 and June 2005 there were six monthly falls and six monthly increases as the market slowed in response to higher interest rates.

It added that higher mortgage repayments and falling earnings in real terms had put pressure on households' income, leading to a slow down in both house price growth and activity.