The Halifax has reported that the price of an average home dropped by 2.4% or £4,600 in May - down to £184,111. It compares very badly to the 10.6% rise in house prices experienced in the year ending last May. This means that the average home has lost £15,000 in value since the market peaked last August - down 8% since prices peaked at £199,600.
Comparing the index's average monthly prices shows an average house is worth £12,525 less than the May 2007 value of £196,636 - a drop of 6.4%.
Economist Howard Archer, of analysts Global Insight, predicted prices would fall by 12% in both 2008 and 2009, revising an earlier forecast of 7% this year and 9% next year.
Archer said: 'The latest data on the housing market are undeniably alarming. Clearly, the downward pressure on house prices coming from stretched buyer affordability and tight lending conditions is now biting hard.
'Elevated affordability pressures on potential house buyers stem from high house prices and modest real disposable income growth, while ongoing tight credit conditions are leading to significantly fewer and more expensive mortgages being available.
'Furthermore, potential house buyers now have to provide higher deposit levels, which is a particularly major problem for first-time buyers.'
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