Britain's housing market fell victim to tighter loan conditions and tumbling demand.
The Bank of England said that mortgage approvals fell to their lowest level in two years, while house prices in England and Wales have fallen for the first time since 2005, property information group Hometrack said. Meanwhile, Britain's Council of Mortgage Lenders forecast a fall in the level of house sales by about 15 percent over the next year.
The Bank of England said that about 102,000 loans were approved for house purchase in September, the lowest level since July 2005. Hometrack, which tracks home valuations, said prices fell 0.1 percent in October amid shrinking demand and declining sales volumes.
Banks and other institutions have tightened standards for loans to British consumers in the wake of the global credit crisis that has swept the world in recent months, which has also hit consumer confidence.
With Britain's housing market already showing signs of cooling after a decade of strong growth, analysts have said that slowdown could be deeper than anticipated.
The average property in England and Wales cost 176,100 pounds (US$361,500; 251,200 EUR) in October, according to Hometrack.