A 0.9 per cent annual fall in house prices may not seem that bad, but Halifax's recording in April of its first annual fall since February 1996 promises to be just the beginning of a long slow slide.

To put the latest monthly figures into context the average price of a home fell £2,607 between March and April to £189,027. That represented a month-on-month fall of 1.3 per cent.

Judging by the slump in mortgage applications and increasing negative sentiment about the health of the economy and house prices generally, it is fair to assume prices will fall about 1 per cent between now and the start of May. That would bring houses prices back level with the end of 2006 when they averaged £187,250.

In the autumn of last year the general consensus was that at worst house prices would fall back to where they were at the end of 2006 as five successive rises in interest rates finally took the exuberance off the early part of 2007.

But sentiment is likely to worsen further this summer as house-hunters start to read Halifax and Nationwide monthly house price figures that will look far grimmer than today's set of falls. They will be making comparisons with house prices that peaked in July and August last year.

According to Halifax, house prices peaked at £199,600 in August 2007. The current rate of monthly decline in house prices - based on the past four months - points to house prices falling to between £182,000 and £184,000 by the end of this summer. That would imply by August that the annual rate of house price fall will accelerate to 9 per cent.

The most likely consequence is that buyers, watching industry indices heading south, will sit on their hands, forcing sellers to lower their prices and thus worsening the viscous downward spiral in prices.

All this can happen without any need for a rush of forced sellers. It is part of the normal workings of a cyclical market.

The problems, however, may start to mount for the housing market when finally those tens of thousands of first-time home-owners who bought over the past two years with 90 per cent or more loan-to-value borrowings wake up to the market. Many will be in negative equity - the value of their homes will be worth less than their loans.

Bank of England base rates may have come down from from 5.75 per cent to 5 per cent since last winter but lenders have yet to pass on in full those cuts. Those first time buyers set for negative equity will be praying that the mortgage market loosens up in time for when they come off two or three year fixed rate deals. If the mortgage market remains tight - as Halifax's chief economist warned today - then at the very least those home-owners better have good employment prospects to cope with a hike in mortgage repayments. Any uncertainty on the latter and there could be an uptick in forced sellers just as prices are on the slide.

It all sounds horribly like the 1990s again but this time round a house price crash could happen in an environment when the Bank's base rate is going down not up. And that is without even factoring in what Britain's army of small buy-to-let investors will do with their portfolios over the coming months.