HOUSE prices in the United Kingdom fell 2.5 percent in March, the biggest one-month drop since 1992, according to a report by the Halifax.
The mortgage lender also said house prices in March were only 1.1 percent higher than a year earlier, the lowest rate of annual growth in 12 years.
"Overall, we expect there to be a modest decline in UK house prices this year," the report said.
It noted that prices were declining from the peak of Britain's real-estate boom. "UK prices have increased by 171 percent over the past 10 years and by 51 percent over the last five years."
In the first three months of this year, the Halifax said house prices in greater London rose 1.6 percent, but prices in the west Midlands fell 5 percent, and in Wales the drop was 4.7 percent.
The Council of Mortgage Lenders reported yesterday that fewer home buyers were applying for fixed-rate mortgages, apparently in the expectation that the Bank of England would continue to reduce base interest rates.
Some 52 percent of mortgage applications in February were for fixed-rate mortgages, the lowest proportion in three years, the council said. "The February figures relate to completions of transactions started several months ago," said Michael Coogan, director general of the Council.
"More recently, there has been consistent evidence of tightening in lending criteria which will lead to shrinking pipelines of new business as the recent Bank of England's credit condition survey made clear.
"We expect this process of further tightening in lending criteria to continue in the second quarter as lenders respond to the challenging market conditions.
"Individual lenders are having to balance consumer demand with service considerations, as many of those active in the market are seeing higher levels of applications than they can deal with in the wake of the overall tightening in supply of funding to the market," Coogan said.
"There is a clear risk that this housing market correction will be sharper and deeper than we currently expect," said Seema Shah, property economist at Capital Economics.
Chris Wood, vice president of the National Association of Estate Agents, said: "House prices are dipping but we are not seeing the market go into terminal decline."