The Nationwide Price Index has shown that house prices were down 2.5% in March, the largest month on month decline since Nationwide's records began in 1991.

According to Nationwide's figures, this is the seventh consecutive month where house prices have fallen, the longest stretch of bad results since 1992. House prices are now 4.4% less than at the same time last year.

Fionnuala Earley, Nationwide's chief economist said, "The pace of house price falls accelerated in May as more weak economic news added to the gathering momentum of negative sentiment about the housing market."

Monthly data is notoriously volatile, but Earley warned of the potential effect on the Bank of England's interest rate decision next month, stating that although "...it is never wise to place too much weight on one data point, the apparent speed of the adjustment may lead the MPC to look more closely at the balance of risks to inflation in the medium term."

Furthermore, "Stronger than expected inflation appears to have shattered hopes of an early rate cut in the Bank Rate in June, but more downbeat economic and housing market data could lead more MPC members to join David Blanchflower in voting for pre-emptive cuts."

Whilst many have warned of an impending recession, Earley strikes an optimistic note, saying "Current market conditions inevitably lead to comparisons with the last episode of falling prices. However there are a number of reasons to believe that today's borrowers are better placed to weather the storm than in the 1990s."

"Tighter credit conditions in the market at present are making it more difficult for borrowers to obtain loans at higher loan-to-value ratios. While this is frustrating for those in that position, more stringent underwriting criteria should ultimately lead to fewer overstretched borrowers and hence a more stable and sustainable market." Ms Earley added.