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House prices fell by 2.3% in February with 2009 set to be "another difficult year" for the housing market, the UK's largest lender said today.
Halifax said rising unemployment and the continued lack of available mortgages for would-be buyers are likely to depress demand for homes for some months to come.
February's fall, reported in Halifax's latest snapshot of the market, more than offsets the surprise 2% increase in prices it reported in January.
Prices are now falling at their fastest ever annual rate, dropping 17.7% since February 2008, according to Halifax's measure, which compares the average price over three months with the same period last year.
Since last February, the average price of a home in the UK has fallen by more than £33,000 from £194,953 to £160,327.
The February price fall reported by Halifax is larger than that reported last week by rival lender Nationwide building society, which said prices were down 1.8% during the month. However, figures for the annual rate of change are in line, with Nationwide also reporting a 17.6% drop.
Halifax's housing economist, Martin Ellis, said there were "tentative signs" that demand for homes had started to stabilise after months of falls, with some buyers tempted back into the market as a result of falling prices.
He said the house prices-to-earnings ratio had fallen to its lowest level for six years with properties now costing an average of 4.4 times salary, down from a peak of 5.8 in July 2007.
But he added that until mortgage lenders begin to offer funding, many would-be buyers will be unable to take advantage of lower prices.
"Continuing pressures on incomes, rising unemployment and the negative impact of the dislocation of the financial markets on the availability of mortgage finance are, however, likely to mean that 2009 will be another difficult year for the housing market," he said.
Howard Archer, chief UK economist at IHS Global Insight, said even if the Bank of England cuts mortgages to 0.5% today, as is widely expected, first-time buyers would still struggle.
"Even if the government's Northern Rock-led measures to lift mortgage lending increasingly take effect, it will still likely only result in a gradual pickup in mortgages," he said.
"The renewed sharp fall in house prices in February reinforces our belief that house prices will fall by a further 15% on the Halifax measure in 2009."
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