House prices in the UK have seen an annual fall of over 10% for the first time since 1990, according to figures released by the Nationwide.

The building society found prices were 10.5% lower in August 2008 than they had been 12 months earlier, knocking £19,000 off the price of the average home.

Nationwide predicted the market would remain flat for some time due to a lack of activity by housebuilders and continued reluctance by the banks to lend.

"There is clearly less mortgage borrowing taking place in the current market, but those borrowers choosing a new loan are tending to opt for fixed-rate loans, even though they have been more expensive than trackers," said Fionnuala Earley, chief economist at Nationwide.