HOUSE prices fell for the eighth month in a row during June.

The average cost of a home slid by 0.9 per cent during the month to stand at £172,415, while annual house price inflation slumped to minus 6.3 per cent, the lowest level since December 1992.

The housing market downturn has now wiped 7.3 per cent, or an average of £13,500, off the value of homes compared with their peak in October last year, with prices falling by 6.4 per cent since the beginning of 2008, according to Nationwide Building Society.

It said the pace of price falls had slowed `significantly' during June, following May's 2.5 per cent dive, adding that prices were still four per cent higher than they were two-years ago.

But figures from the Bank of England showed that mortgage approvals for house purchases had slumped to a record low, suggesting there are further falls to come.

The Bank said just 42,000 new loans were approved for people moving during May, 28 per cent below April's level and 64 per cent down on the figure for the same month of 2007. Economists branded the data `absolutely dire'.

A Nationwide spokesman said transactions were a key driver of house prices. She added: "With house purchase transactions so far below their long term trend it seems unlikely that there will be any rapid turnaround in housing market fortunes in the coming months.

"However, as prices continue to fall affordability becomes more favourable for those in a position to buy."

Britain's biggest mortgage lender Halifax recently increased its forecast for house price falls this year to nine per cent.