House prices see biggest fall in 12 years:

House prices fell at their sharpest rate in more than twelve years in November, the Nationwide building society said on Thursday, in another sign the UK property market is cooling fast.

Some economists said the growing signs of a housing market slowdown had strengthened the case for a cut in interest rates. Sterling fell against the dollar after the report was released.

The Nationwide said the cost of an average home fell 0.8 percent this month -- the first decline since February 2006 and the biggest drop since June 1995, after a 1.1 percent rise in the previous month.

That took the annual rate of growth down to 6.9 percent, its weakest since August 2006, from 9.7 percent in October.

"The growing evidence of a significantly slowing housing activity boosts the case for the Bank of England to cut interest rates by 25 basis points to 5.50 percent in December. The decision currently looks balanced on a knife edge," said economist Howard Archer at Global Insight.

After years of double-digit growth, the housing market is expected to slow sharply over the next few months as lending conditions tighten in the wake of the global credit crunch and first-time buyers find it harder to make any purchase.

"Today's data bring Nationwide in line with recent gloomier reports from (Halifax), pointing to a more unequivocal housing market slowdown which, in turn, will underpin expectations of an imminent ease from the Bank of England despite the decidedly cautious rhetoric emanating from the Bank of late," said RBS Capital Markets.

The Bank of England is also expected to report a sharp drop in new mortgage approvals for October at 9:30 a.m.

The Nationwide is predicting house prices staying unchanged for most of 2008. Financial markets, meanwhile, have been predicting a fall of as much as 7 percent.

"November's data confirms that the housing market is indeed cooling," said Fionnuala Earley, Nationwide's chief economist. "Poor affordability, weaker house price growth expectations and the effect of earlier increases in interest rates have all affected demand in the market."

"Looking forward, it is clear that there are uncertainties in the market, not least from the continuing turmoil in the UK's financial markets and the overall impact that this may have on the future performance of the UK economy," Earley said.

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