House prices in November suffered their worst monthly fall in nearly a year, new data reveals today, putting pressure on the Bank of England to announce an interest rate cut tomorrow.

The Halifax house price index showed that prices in November fell by 1.1 per cent. This is the largest decline since December 2006, when prices dropped by 1.3 per cent.

The November fall follows declines of 0.5 per cent in October and 0.6 per cent in September – the first time prices have fallen for three months in a row since 1995. The average house cost £194,895 in November compared with £197,248 in October.

Mortgage approvals during November were 12 per cent down on the previous month. The fall was 32 per cent compared with the same month last year.

House prices in the 12 months to November grew by 6.3 per cent. This is the lowest rate of growth this year and little more than half of a peak just three months ago, when annual prices rose by 11.4 per cent.

Halifax said five increases in interest rates since August 2006 were now taking effect on the housing market. Higher mortgage repayments and rising household outgoings were now resulting in "a slowdown in both house price growth and activity".

The Bank of England's Monetary Policy Committee (MPC) is meeting today and tomorrow to decide whether to keep the UK interest rate unchanged at 5.75 per cent or cut it by a quarter point to 5.5 per cent.

At last month's interest rate meeting, a split emerged at the top of the Bank, when Sir John Gieve, the Bank’s deputy governor for financial stability, voted to cut rates alongside MPC dove David Blanchflower.

Mervyn King, the Governor, and Rachel Lomax, his deputy governor for monetary policy, were among the seven MPC members who voted to keep rates unchanged.

Howard Archer, chief UK and European economist at Global Insight, said: "The third successive, and deeper, fall in the Halifax house price index in November raises concern that the housing market is headed for a sharp correction – particularly as it follows very weak Bank of England mortgage approvals data for October.

"Hence the Halifax data provides significant late support to the case for the Bank of England to cut interest rates by 25 basis points to 5.50 per cent on Thursday."

Despite slowing house prices, Halifax said that the economy remained robust with GDP up 0.7 per cent for the eighth consecutive quarter, above the average 0.6 per cent. Also, employment is at a record high, up 69,000 between the second and third quarter of this year to 29.22 million.

Halifax said: "The economy has now grown for 61 successive quarters. This represents the UK's longest running period of unbroken GDP growth on record; a performance that no other developed nation can match.

"Again, this provides the housing market with a very solid foundation."

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