British house prices fell by 2 per cent between May and June, above expectations of a 1 per cent decline, adding to growing evidence the slowdown in the housing market is gathering pace.

According to Halifax, the UK’s largest mortgage lender, house prices fell by 6.1 per cent in the year to June - the highest level since March 1993 and up from 3.8 per cent in the year to May.

However, Halifax said today that the average UK house price remains slightly higher, up 2 per cent, than two years ago and more than 10 per cent higher than in June 2005, indicating that the British housing sector still has some way to go before it reaches the bottom of the cycle.

This morning, Barratt Developments became the latest housebuilder to release dire sales figures and announce 1,200 job cuts, as conditions in the mortgage market continue to tighten and make it more difficult for borrowers to secure home loans.