House prices fall for first time in 12 years

House prices across the UK have fallen on an annual basis for the first time in over 12 years, according to new data from Britain`s largest building society.

Research by Nationwide found that prices dropped during April by 1.1 per cent, which means that the average home in the UK is worth one per cent less than it was in April 2007.

The average house price now stands at £178,555, down from £179,110 in March.

Nationwide revealed that there had been a "steep decline" in house buying in the last six months owing to falling demand from first-time buyers, higher mortgage rates and tighter lending criteria.

The rise in unsold property on the market improved the bargaining power of buyers which pushed down prices.

Nationwide`s chief economist Fionnuala Earley commented: "Although retail spending has so far been remarkably resilient as the housing market has faltered, lower house prices are likely to weigh down on the consumer over time."