Nationwide says house prices falling fastest in 18 years

Prime properties in the heart of rural England have finally been drawn into Britain's sliding housing market, it emerged today, as the Nationwide building society reported that prices are falling at their fastest annual rate in almost 18 years.

Savill's, the UK property agency that specialises in the high-end of the property market, said that deals involving country piles worth up to £5 million are declining, following a 45 per cent fall in transactions in central London where prices fell by 7 per cent.

The company said: "Prime country property was initially less affected than London but is now following suit."

The company confirmed that it will cut jobs as a result of the dire conditions in the market but declined to comment on how many staff will be cut. In the UK alone, Savills employs 3,000 people.

Nationwide, the UK's largest building society, said the decline in house prices was now reaching double digits and falling at a rate not seen since the fourth quarter of 1990.

In its latest monthly assessment of the market the society said the price of a typical house had fallen by 10.5 per cent over the last 12 months to £164,654.

The monthly drop in house prices accelerated to 1.9 per cent in August, Nationwide said. The society said that prices fell by 1.5 per cent the previous month.

With house prices falling steadily since last October, according to the lender, it means that the housing market has been in steady decline for almost a year.

Fionnuala Earley, Nationwide's chief economist, said: "Recent activity levels in the housing market have been very subdued.

"House builders in particular have been reporting significant reductions in site visits and reservations of new properties since this time last year, in spite of a big increase in the use of sales incentives."

Yesterday, it emerged that Taylor Wimpey, the UK's biggest housebuilder is selling less than half a house a week on each of its sites despite offering huge incentives to homebuyers.

Uncertainty over house prices has prompted speculation that thousands of estate agents will be made redundant.

Foxtons', the private equity-owned estate agent, appears to be under increasing pressure over the terms of an attempted financial restructuring.

Reports today suggested that lenders to Foxtons had called in Close Brothers as an adviser after failing to syndicate £270 million of the debt they used to back the buyout of the estate by BC Partners, the UK private equity group.

The latest data from Nationwide come after figures from the British Bankers Association earlier this week that showed that mortgage approvals fell 65 per cent last month.

The Council of Mortgage Lenders reported that lending to the embattled buy-to-let sector had dried up.

Today's figures from Nationwide, traditionally among the least conservative of house price monitors, comes after Halifax, a rival, said house prices fell 1.7 per cent in July and at an annual rate of 8.8 per cent.

Halifax reckons that the average house price was £177.351 in July.