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House prices slumped by 2.6% in November, despite aggressive interest rate cuts at the start of the month that reduced the cost of borrowing, figures showed today.
The UK's largest lender, Halifax, said a combination of high house prices in relation to earnings, constraints on household incomes and the decline in mortgage availability had resulted in the largest monthly fall in prices in 16 years.
Halifax's monthly snapshot of the housing market shows the average house price has fallen by 16.2% since last November from £195,092 to £163,605.
The lender's own annual change figure, which compares the past three months with the same period last year, shows prices are down 14.9% year-on-year.
Both figures are the highest ever recorded by Halifax, while the monthly decline is the biggest since prices started to fall in autumn last year and the largest since September 1992.
The November fall is bigger than that recorded in October, when prices dropped by 2.4%, and has been driven by a continued lack of demand for homes.
Figures from the Bank of England showed the number of mortgages approved for homebuyers in October fell to just 32,000, and is continuing to put downward pressure on prices.
Halfax's chief economist, Martin Ellis, said the fall in prices had made homes more affordable to buyers than at any point in the past five years, with the average price now just 4.65 times average earnings.
He said: "There are also signs that the pressures on incomes may be beginning to ease. Retail price inflation has started to decline and is likely to fall significantly over the coming months, helped by lower energy prices and weaker food price rises."
However, buyers are still struggling to raise mortgage funding from lenders wary of taking on too much risk. Many have restricted loans to a maximum of 75% of a property's value, and first-time buyers are finding that if they are offered a loan it is often very expensive.
Howard Archer, chief UK economist at HIS Global Insight, said that while banks and building societies remained reluctant to lend, prices would continue to fall.
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