UK house prices fell at their fastest monthly rate since 1995 in November, according to a Nationwide survey published on Thursday that adds to evidence of a rapid cooling in the UK housing market.

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The lender said prices fell 0.8 per cent this month, below analysts’ expectations and reversing a surprise gain of 1.1 per cent in its October survey.

It is the first monthly fall reported by Nationwide since February 2006, and brings the annual rate of house price inflation down to 6.9 per cent, the lowest since August 2006.

The figures match surveys suggesting price falls have spread to more areas of the country in recent months while activity has slowed sharply, with surveyors reporting rising stocks on estate agents books and dwindling numbers of new buyers.

The Bank of England is expected to report a large fall in mortgage approvals for October on Thursday, after figures from the British Bankers Association last week which suggested that have reined back sharply on lending activity.

“November’s data confirm that the housing market is indeed cooling in line with the weakening in housing market drivers,” said Fionnuala Earley, economist at Nationwide.

Fears about the outlook for the economy weighed on sterling. The UK currency fell back from a day high of $2.0789 to $2.0700 and stood at 71.53p against the euro, up from 71.25p at the close on Wednesday.

While monthly figures are often volatile, the three monthly growth rate has slowed from 1.8 per cent in October to 1.5 per cent, back in line with the softening trend.

“The evidence continues to mount that house prices are now cooling markedly in the face of slowing activity, increased affordability pressures and tightening lending practices,” said Howard Archer, economist at Global Insight.

Nationwide expects house prices to stagnate next year, but the lender sought to play down City expectations, reflected in derivative trading, of a fall of up to 7 per cent.

“This rapid swing is likely to be a reflection of current financial uncertainties... but it illustrates how quickly the mood and change,” Ms Earley said. “We already expect economic conditions to be more difficult for the housing market next year, but we do not expect a recession.”