House prices fell for the eighth month in a row during June, while annual growth fell at its fastest rate since the 1990s crash.

The average cost of a home in the UK 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, according to the Nationwide Building Society.

The housing market downturn has now wiped 7.3 per cent, or £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.

But figures from the Bank of England released on Monday 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, who branded the data "absolutely dire", warned that the current housing market correction could be worse than previously thought.

Government figures released last month showed that transaction volumes fell by 37 per cent during May compared with the same month of 2007, while the Land Registry said the latest figures on house sales showed that they were running at half last year's level.

Fionnuala Earley, Nationwide's chief economist, said: "The tightening of credit conditions over previous months along with changing expectations of house price growth and a general weakening in consumer confidence in the economy have hit mortgage demand and led to a severe slowing in the levels of housing market activity."

It comes as the Royal Institution of Chartered Surveyors (RICS) said the current system of stamp duty was "unfair, ineffective and long overdue for reform".

It is calling for an incremental one tax, in which higher rates are paid on only a portion of a property's value and it to be abolished altogether for first-time buyers.

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