The pace of falling UK house prices accelerated sharply last month. According to figures this morning from the Nationwide Building Society, prices are now dropping at an annual rate of 6.3 per cent, the biggest drop since November 1992 and compared with an annual 4.4 per cent fall in May and 1 per cent in April.

However, the monthly figures showed a slowing in the rate of price falls, with prices falling 0.9 per cent in June compared to a 2.5 per cent fall in May. June's fall was the eighth monthly drop in a row. The price of a typical house is now £172,415, a fall of £11,600 from the average price in June 2007.

Howard Archer an economist at research firm Global Insight said: "This is hardly the most reassuring of news and does little to dilute concerns that we are headed for a sharp correction in house prices.

"Indeed, house prices fell 3.7 per cent quarter-on-quarter in the second quarter of 2008, compared to a drop of 2 per cent in the first quarter."

Nationwide said the slowdown was still being driven by the lack of cheap mortgages. Average two-year fixed mortgage rates are now at an 11-year high at 7 per cent according to Moneyfacts.

Home buyers also now have to provide higher desposits and arrangement fees have risen sharply.

The latest data from the Bank of England show that mortgage approvals for house purchases slumped to 42,000 in May - the lowest level since comparable records began in 1993 and down a staggering 63.8 per cent year-on-year from the May 2007 peak of 116,000.

The Bank of England also revealed that mortgage lending retreated sharply to £4.1 billion in May from £6.2 billion in April.

Cazenove analyst Anthony Codling commented: "New loans are no longer being rationed, they are suffering a famine."

Furthermore, latest survey evidence shows that agreed house sales are very low, buyer interest is continuing to decline, it is taking longer to sell a house and sellers are achieving a falling percentage of their asking price. All these factors point clearly to further declines in house prices.

Global Insight forecasts house prices to fall by 12 per cent in both 2008 and 2009, before gradually flattening out during 2010. As a result, house prices are seen falling 24 per cent in nominal terms from their October 2007 peak of £186,044 to stand at £141,003 at the end of 2009 (based on the Nationwide measure).

But Mr Archer warned that the forecasts could be driven further downward, particularly if the Bank of England's next move is to raise interest rates.

Money Central: the latest house price forecasts, region by region