Property prices in the UK slipped by 2.4 per cent in May, figures from the Halifax show.

The lender said prices were now 3.8 per cent lower than a year ago, a drop of around £7,500, which has taken the average UK house price down to £184,111.

According to the Halifax, the decline in prices has been caused by the difficulties created for potential house purchasers by the rapid rise in house prices in the last few years, a squeeze on spending power and the reduction in credit availability.

The Halifax, the UK's largest mortgage lender, said the annual fall in prices was the largest it had seen in nearly 15 years.

But the company says the falls should be seen in the context of huge recent rises.

"Price falls should be measured against the significant gains in recent years," said Halifax chief economist Martin Ellis.

"The average UK house price rose by more than £88,000, or 79 per cent, between August 2002 and August 2007."

Nationwide building society, the UK's second-largest lender, reported a 2.5 per cent drop in property prices during May.

And looking ahead, the prospects for the UK housing market look even gloomier.

The Halifax predicted that prices will fall next year as well as in 2008.

The article House prices fall as market continues to slow originally appeared on 999 Today