UK home values fell for an eighth month in May and will probably drop further, Hometrack said.
The average cost of a residential property in England and Wales slipped 0.5 per cent to £172,200, the London-based research company said today in a statement.
Prices fell 1.9 per cent from a year earlier, the biggest decline since November 2005.
"The 'buyers' strike' continues," said Richard Donnell, director of research at Hometrack, in a statement. "Pricing looks set to remain under downward pressure over the coming months."
Bank of England Governor Mervyn King predicted this month that property values are "likely to fall further" and said there is a risk that the UK economy may contract. The construction industry dragged down economic growth to the slowest pace since 2005 in the first quarter and homebuilders are cutting tens of thousands of jobs.
The percentage of sellers' asking prices being achieved slipped to 92.3 per cent this month, the lowest since the survey began in 2001, Hometrack said today. Average time on the market increased to 9.8 weeks from 5.8 weeks a year ago.
"The fall in buyer confidence over the last six months has certainly impacted on transaction volumes but we do not believe this is a precursor to a major rise in forced sales and large prices falls," Mr Donnell said.
HBOS, the UK's biggest mortgage lender, said on May 2nd that home values based on agreed transactions fell 0.9 per cent from a year earlier, the first drop in more than a decade.
UK homebuilders will shrink their workforce as the £19 billion industry grapples with the housing slump, Stewart Baseley, chairman of the Home Builders Federation, said in an interview last week.
The rate of economic growth slipped to 0.4 per cent in the first quarter from 0.6 per cent in the last three months of 2007.
Home buyers are paying more for mortgages after the global credit squeeze prompted lenders to curb lending.
UK banks increased the cost of home loans with a 5 per cent down payment to the highest in more than eight years in April, failing to pass on the Bank of England's three interest-rate cuts since December.
Bloomberg