House prices fall for fifth month running

LONDON (Reuters) - House prices fell for the fifth consecutive month in March, bringing the annual rate of increase to its lowest in 12 years, a key survey showed on Friday.

The Nationwide Building Society said house prices fell 0.6 percent this month after a 0.5 percent drop in February -- a clear sign the property market is weakening fast.

Average house prices rose 1.1 percent from a year earlier, the weakest annual increase since March 1996.

The pound fell to an all-time low versus the euro on the back of the weak housing data and a survey that showed consumer morale fell to its lowest level in more than 15 years.

The euro rose as high as 79.14 pence while short sterling interest rate futures rose.

"The Nationwide data indicate that house prices are continuing to buckle under the substantial pressure emanating from increased affordability constraints and markedly tighter lending conditions," said Howard Archer, economist at Global Insight.

"The current escalation of the credit crunch means that there is an increased risk that a significantly sharper housing market correction could occur," he said.

On Thursday, three of Britain's biggest mortgage lenders raised some home-loan rates in response to tighter lending conditions stemming from the global credit crunch -- despite the fact the Bank of England's key lending rate has been falling.

The three-month London Interbank Offered Rate has risen to about 6 percent, its highest level this year and 75 basis points above the central bank's base rate.