Year-on-year house prices dip by 1%

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The cost of a home dropped for the sixth month in a row during April, sliding by 1.1%, as the credit crunch continued to take its toll on the property market.

The fall helped turn annual house price growth negative for the first time in 12 years, leaving property values 1% lower than they were in April 2007, according to Nationwide Building Society.

The average home in the UK now costs £178,555, £1,759 less than 12 months ago.

But the drop needs to be seen in the context of the strong house price growth seen in recent years, with house prices soaring by 45.5% during the past five years.

Nationwide's chief economist Fionnuala Earley said: "April was another difficult month for the housing market. Falling levels of market activity meant that prices fell by 1.1% during the month and ended up 1% lower than this time last year.

"April's fall in prices continues the trend of the last six months and reflects the weakening sentiment in the market brought about by poor affordability and tighter financial market conditions."

But she stressed that the current situation was different to conditions leading up to the 1990s house price crash.

The figures come the day after the Bank of England said the number of mortgages approved for house purchase had fallen to a record low during March.

Just 64,000 loans were approved for people moving house during the month, the lowest figure since the Bank of England began to collect data in April 1993 and 44% below March 2007's level.