House prices fall 2 percent in June

By Sumeet Desai

LONDON (Reuters) - House prices fell at their sharpest annual pace in at least two decades in June, data showed on Thursday, as the downturn in the property market accelerates and threatens to plunge the economy into recession.

HBOS said prices fell 2 percent last month alone.

Prices were 8.7 percent lower on the year, a bigger decline than the worst point of the last housing market crash in 1992, wiping out 20,000 pounds off the value of the average home since last year's peak.

"Given that the early 1990s was at that stage the biggest housing slide of the last 50 years, it is fair to say we are now in the worst housing slide for over 50 years," said Michael Saunders, economist at Citigroup.

The figures came as Bank of England policymakers were still deciding what to do with interest rates this month, but economists said rising inflation meant the central bank would keep borrowing costs pegged at 5 percent for now.

"It certainly will feel unable to support the housing market and the wider economy which seems to moving to the brink of a recession," said David Page, economist at Investec.

House prices have trebled over the last decade but a global credit crunch has made lenders much more wary about making new home loans. Mortgage approvals have more than halved from last year and activity in the once-booming property market has all but dried up.

With two-thirds of Britons owning their homes, consumer confidence has already tumbled and the wider economy is now also suffering.