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UK house price slump continues

The data from Nationwide, the country's largest building society, showed that prices have now fallen for 15 consecutive months.

However the statistics from the mortgage lender show that the rate of price falls has eased slightly when compared with December's 2.5% fall.

But the report still makes grim reading as the latest price decline takes the annual rate of decline in house prices to 16.6%, from a rate of 15.9% in December.

Rising unemployment, job security worries and lack of lending are undoubtedly putting people off buying a property or moving home, it said. The average house in the UK now costs £150,501, down from £153,048 a month ago.

'The deepening economic recession and financial market turbulence continued to weigh on housing market sentiment and activity,' said Nationwide's senior economist, Martin Gahbauer.

The housing market was unlikely to improve until the economy stops shrinking, the lender said. Continued restrictions of credit was reducing the amount of people taking out mortgages, it said.

Gahbauer pointed out that the short term signs look better than they have. 'The three month on three month rate of change, a smoother indicator of the short-term trend in prices, improved for the fourth consecutive month from -4.2% in December to -4.0% in January,' he said.

But he warned against any immediate improvement. 'It is too early to say that this marks the start of a sustained improvement in the short term trend,' he added.

His remarks come at a time when the International Monetary Fund is warning that the recession in the UK is likely to be deeper than anticipated and the worse economic crisis since the 1940s.