Home-owners were dealt a fresh blow today as Halifax, Britain's largest mortgage provider, said today its measure of house prices had suffered its first annual fall in 12 years.

Halifax's parent bank HBOS, warned homeowners earlier this week to expect two years of falling house prices as it unveiled a £4bn rights issue to strengthen its capital position in the "deteriorating credit environment''.

The latest Halifax monthly house price figures echo findings published earlier this week by Nationwide, the country's largest building society lender, and the latest in a string of gloomy house price surveys which all indicate the market could be heading for a repeat of the early 1990s house price crash .

Halifax says house prices fell in April by 1.3 per cent, the fourth monthly decline Halifax has recorded. In March Halifax figures showed a 2.5 per cent monthly decline, the biggest monthly drop since 1992.

In the past year, the price of the average UK house has fallen £7,235 from the average price of a UK home to £189,027. That implies a typical home has fallen on average nearly £20 per day.

Based on the Halifax's measure using a three-month average, the bank calculates the year-on-year price fall is running at 0.9 per cent.

Andy Hornby, chief executive of HBOS, said earlier this week that it was "inevitable we will have a couple of years of modest [house price] declines.'' HBOS said it was expecting a fall this year of about 5 per cent or "mid single digits", having forecast a low single digit drop earlier in April and a flat market before that.

Martin Ellis, chief economist at Halifax, confirmed those predictions today but warned that homeowners in certain regions would face far sharper falls in the value of their homes.

He said: "Some areas of the country are likely to record modest price rises while other parts are expected to see falls above the national average."

Estate agents have reported that prices of inner City flats in parts of Birmingham and Leeds are already selling for more than 20 per cent less than they would have fetched a year ago.

Forecasts of prolonged periods of house price falls are rapidly increasing fears that hundreds of thousands of home-owners will fall into negative equity. Many first time buyers over the past two years will have bought financed with loans worth 90 to 100 per cent or more than the value of their properties.

Two days ago Nationwide, Britain's largest building society, said its measure of house prices suffered its first annual fall since 1996, down 1 per cent, and the pace of monthly decline was increasing.

Nationwide said the average price of a home fell by 1.1 per cent in April, the sixth successive monthly fall. Its report co-incided with a warning for homeowners came as Jim O'Neill, chief economist at Goldman Sachs, who correctly forecast the collapse of the US property market, said that Britain was likely to be the worst-hit of the world's economies in the fallout of the global credit crisis.

Mr O'Neill said that Britain, with its heavy reliance on financial services, was "in the eye of the storm of a de-leveraging world economy" and that British homeowners would weather the brunt of the City's ensuing slowdown.

House price research group Hometrack's April report showed a fall in prices for the seventh month in a row.

The regular monthly polling by Royal Institute of Chartered Surveyors of its members, which establisheshow many are reporting falls or rises in house prices, revealed that In March a record 78.5% reported a drop in the value of property - a more dismal state of affairs than during the 1990s house-price crash.

Land Registry records which lag the other surveys as they track all completed sales, showed that in the latest quarter to January they were down 26% year on year.

The prospect of a sharper slump in housing transactions to come was foreshadowed by figures from the Bank of England last month which showed that the number of approved mortgages for house purchases fell 46.2% in March from the same month in 2007.

The credit crunch has already started to affect the housing market as prospective buyers have been deterred by demands from lenders for hefty deposits. Seven of the ten major lenders will not lend to borrowers who have less than a 10 per cent.

Capital Economics, an independent think-tank, cut its already bearish predictions for UK house price inflation on April 21 to minus 8 percent and minus 10 percent for 2008 and 2009, respectively.

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