Property prices 'fall 2.6%'

House prices in the UK have fallen at their fastest rate for a quarter of a century, signalling that stock market investment may be a better option than investing in property.

New figures from Halifax reveal that the average price of properties dropped by 2.6 per cent last month, compared with data from October.

Overall, prices are now 16.1 per cent lower than at the same time last year.

Howard Archer, chief UK and European economist at IHS Global Insight, commented: "Ongoing very tight credit conditions, still relatively stretched housing affordability on a number of measures, faster rising unemployment, muted income growth and widespread expectations that house prices form a powerful set of negative factors are weighing down on the housing market."

Martin Ellis, chief economist at Halifax, said the combination of high house prices, the declining availability of mortgage financing and constrained spending power were the main factors influencing the drop in house prices.