Further evidence that Britain's housing slump is gathering pace has been provided by figures from Halifax, which show that house prices are plunging at twice the rate of the property market's drastic downturn in the early Nineties.

House prices fell by a further 2.4 per cent last month, extending losses that have left them down by 6.6 per cent since January, wiping £13,000 off the value of the average home.

Prices have fallen twice as fast in the past five months as in the same period in 1992, during the most recent property crash, when they fell by only 3.3 per cent, based on Halifax figures. The decline in prices this year is the biggest five-month fall since records began in 1991. If the deterioration in house prices continues at its present pace, the value of a home will slump by more in six months this year than in the whole of 1992, when prices fell by a total of 7.2 per cent. Some economists forecast that prices could fall by up to 12 per cent this year, followed by further declines next year.

After the Bank of England took a hardline decision to keep rates on hold yesterday there were fears that it could raise interest rates later this year after the European Central Bank issued a surprise warning that surging inflation may force it to lift eurozone rates as early as next month. The emerging threat of higher base rates in the UK will add to the growing pressure on families struggling with the rising cost of living.

The threat that a brutal housing crash could be more severe if the Bank raised rates is certain to sound alarm bells at the Treasury.

Bradford & Bingley is expected to aggravate the pain today, when the troubled lender increases rates on all of its home-loan products, although it has not said by how much.

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