House prices fell by 12.7 per cent in the year to August, it emerged today, declining at the fastest rate since 1983.

Today's figure is above the 10.5 per cent annual fall recorded by Nationwide last month.

Halifax said today that house prices in the three months to August 2008 fell by 10.9 per cent, compared with same period last year, However, comparing August this year with the same month last year shows a much steeper drop of 12.7 per cent.

The average price of a house is now £174,178, just below the £175,000 threshold that qualifies homeowners for a year-long stamp duty holiday as part of plans, revealed by Prime Minister Gordon Brown this week, aimed at kick-starting Britain's stagnant housing market.

However, the Council of Mortgage Lenders (CML) has called on the Government to do more to help boost the lending market by extending its mortgage swap plan, which allows banks to exchange hard to trade mortgage-backed securities for government debt. The scheme, which was announced in April, is set to end in October.

In a letter to Alistair Darling , Michael Coogan, director-general of the CML, said: “Funding problems in the mortgage market [are] a fundamental bar to meaningful housing market recovery."

On a monthly basis, house prices fell by 1.8 per cent in August, above the 1.7 per cent rate of decline in July but below previous months, including May, when houses were worth 2.5 per cent less.

Today's gloomy figures were revealed hours ahead of the MPC's interest rate decision.

The MPC kept borrowing costs on hold at 5 per cent in an effort to contain rising inflation, which is currently at a 16-year high of 4.4 per cent — more than double the Government's 2 per cent target.

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