House prices fall at fastest rate since '91

By Matt Falloon

LONDON (Reuters) - House prices fell 1.7 percent on the month in July and at the fastest annual rate since at least 1991, the Nationwide building society said on Thursday, in a further sign the housing market is cooling fast.

The figures came hours after a survey showed consumer confidence fell to a record low this month, highlighting the uphill struggle facing Prime Minister Gordon Brown if he is to regain public support before the next election.

The GFK NOP consumer confidence index fell five points to -39 in July, the lowest reading since the survey began in 1974.

Nationwide said the average house price fell for a ninth straight month in July to 169,316 pounds -- 9 percent below the peak hit in October last year of 186,044 pounds and the lowest level since August 2006.

House prices were down 8.1 percent compared to the same month a year ago -- the biggest annual fall since the monthly series began in January 1991.

"The combination of weaker consumer confidence and sharply slowing house prices will take its toll on consumer spending and the broader economy throughout the remainder of this year," said George Buckley, chief UK economist at Deutsche Bank.

RATE FOCUS

The weaker-than-expected figures are likely to fuel speculation that the next move in official interest rates will be down.