UK house prices post biggest fall since 1993

By Matt Falloon and Sumeet Desai

LONDON (Reuters) - British house prices took their steepest annual fall in 15 years in April, data from Britain's biggest mortgage lender showed on Friday, stoking fears of a deep downturn this year.

The weak figures from HBOS Plc come after a Bank of England policymaker warned house prices could fall by more than 30 percent and add to the woes of Prime Minister Gordon Brown, whose Labour party has suffered heavy losses in local government elections.

"This is a dark cloud that is getting ever darker for the economy," said Alan Clarke, an economist at BNP Paribas.

House prices fell 1.3 percent on the month to 189,027 pounds ($375,700) last month, the third monthly decline in a row, leaving prices 3.7 percent lower than April last year.

That was the biggest yearly decline since June 1993, analysts said, when the British economy was still in the throes of a protracted housing slump.

"We expect house prices to fall 7 percent in 2008 and 9 percent in 2009," said Howard Archer, economist at Global Insight.

Bank of England arch dove David Blanchflower said this week Britain's economy could fall into a recession and house prices could dive unless policymakers acted immediately to shore up growth.

But most analysts expect the central bank to wait until June before trimming rates again, having already reduced them three times since December, as inflation is running high despite the slowing economy [BOE/INT].