News of the steepest ever monthly fall in house prices shortly before the Bank of England made its interest rate cut sent the pound into a fresh slide to touch $1.4467, its lowest level against the greenback for more than six years.

Halifax, Britain’s biggest mortgage lender, reported that house prices fell by 2.6 per cent during November, lowering the average price to £163,605, down from £195,029 in November last year, a drop of 16.2 per cent.

Comparing the latest three months with September/November, 2007, the year-on-year decline was 14.9 per cent.

This finding contrasts with that from Nationwide, which showed the slide in house prices easing off to 0.4 per cent last month from 1.3 per cent in October, when Halifax reported a 2.4 per cent drop. Nationwide’s measure of the year-on-year decline, though, was only one per cent short of Halifax’s

Martin Ellis, chief economist at Halifax pointed out that the average house price as a multiple of average earnings is now more favourable that at any time for more than five years – although at 4.56, the ratio is still well above a long-term average of four. It peaked at 5.68 last December. “There are also signs that the pressure on incomes may be beginning to ease,” Mr Ellis added. Retail price inflation has started to decline and is likely to fall significantly over the coming months, helped by lower energy prices and weaker food price rises.”

He also noted that the number of mortgages for house purchase recorded by the Bank of England has now been unchanged for four months, suggesting that housing market activity may be stabilising, albeit at a low level.

The Halifax average price is now back where it was in July, 2005, though still £90,000, or 124 per cent, higher than it was 10 years ago.

Howard Archer, chief UK and European economist at IHS Global Insight, described the Halifax findings as “a real shocker”.

He noted that the 16.1 per cent fall between this November and last was sharper than anything seen in the downturn of the early 1990s, indeed the sharpest drop since Halifax started tracking prices this way in 1983.

“Housing market fundamentals remain largely unfavourable,” he warned.

“Banks are still very reluctant to lend, so it remains very difficult for many people to get a mortgage or find the required larger deposit.”

“The Halifax data also contrast markedly with the surprisingly small 0.4 per cent month-on-month drop in house prices reported by the Nationwide in November.”

He expects house prices to go on falling until mid-2010, when the Halifax measure of the average will touch a low of £130,551, 35 per cent down from its peak in August, 2007.

Seema Shah, property economist at Capital Economics, said: “The speed at which this housing market correction is unfolding, already the fastest on record by a country mile, is likely to step up a gear over the coming months. House prices are now 18 per cent lower than at their peak in 2007.”