The scarcity of low-priced mortgage deals is hitting home sales across the UK - as the value of the average property has fallen by 12.4 per cent in the last 12 months due to shrinking demand, according to Nationwide.

On average, a home in the UK now costs £161,797, according to the monthly house price index, released this week by the building society. And the market is not likely to improve in the short-term as economists predict further falls. "The latest fall-out in the property market is not altogether surprising given the turmoil in financial markets over the past month," says Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors. "The recent increase in some mortgage rates and the continuing squeeze on the supply of loans suggest that further price falls are likely."