House prices fell 16.1 per cent in the last year.

The average home is now worth £163,605 – a drop of 2.6 per cent in November – according to the Halifax house price index.

Property values were down by 14.9 per cent year-on-year in the three months to November.

House prices are now at the same level as in July 2005 – meaning anyone buying since then could now be in negative equity.

However, the bank points out average house prices are still 124 per cent higher – or over £90,000 – than ten years ago.

“The latest Halifax house price data are a real shocker, even by the recent very low standards of the housing market,” said Howard Archer, chief UK economist at Global Insight.

“House prices were down 16.1 per cent year-on-year in November itself, which is a sharper drop than was seen in the early-1990′s housing downturn.

“Indeed, it was the sharpest drop since the series began in 1983.”

Indeed, latest data from the Bank of England show that mortgages approved for house purchase are also at record low levels.

Martin Ellis, Halifax chief economist, said housing demand was being curbed by the decline in the availability of mortgage finance, constraints on householders’ incomes and spending power and high house prices in relation to earnings.

However, he managed to find some hope among the house price bad news.

“Lower house prices, however, mean that a key housing affordability measure – the house price to earnings ratio – is at its most favourable for over five years at 4.56,” Mr Ellis said.

“There are also signs that the pressures on incomes may be beginning to ease. Retail price inflation has started to decline and is likely to fall significantly over the coming months, helped by lower energy prices and weaker food price rises.”

Halifax also predicts the market is now set to be bottoming out – albeit at a low level – as the number of mortgage approvals flattens.

The number of completed home sales in England and Wales in August was 64 per cent lower than a year earlier, according to the latest Land Registry figures.

Global Insight now forecasts house prices to fall by a further 15 per cent on the Halifax measure in 2009 after a likely decline of some 18 per cent in 2008.

A reduced fall of five per cent in house prices is expected in the first half of 2010, before prices flatten out in the latter months of 2010.