UK house prices fall for fifth straight month--Nationwide

LONDON (Reuters) - British house prices fell for a fifth straight month in March, bringing the annual rate of increase to its lowest in 12 years, in a clear sign the once red-hot property market is weakening fast.

The Nationwide Building Society said on Friday that house prices fell by 0.6 percent this month after a 0.5 percent fall in February. That left the average house price just 1.1 percent higher than a year earlier, the weakest annual increase since March 1996.

The mortgage lender said it now expected house prices to record a modest fall over 2008, in line with a number of other analysts who are also predicting an annual price drop after a decade in which the cost of the average home has trebled.

"A clear change in sentiment since the late summer has led to a sharp slowing in house price growth," said Fionnuala Earley, Nationwide's chief economist.

"A moderate fall in house prices at this stage should not be unwelcome and should help to ensure stability in the market going forward."

Industry mortgage approvals figures released on Thursday were also consistent with further falls in house prices, analysts said, as banks are tightening their lending criteria because of a global credit crunch.

The figures follow news that the consumer mood has soured to its lowest point since the slump of the early 1990s and are worrisome for Prime Minister Gordon Brown, whose Labour Party is suffering in the polls.

(Reporting by Sumeet Desai; editing by David Christian-Edwards)