The average cost of a home in the UK has dived by 10.5 per cent during the 12 months to the end of August, the biggest drop since the final quarter of 1990, according to Nationwide Building Society.

The rate at which property values are sliding also accelerated during the month, with prices falling by a further 1.9 per cent in August, following drops of 1.5 per cent and 0.9 per cent in July and June respectively.

House prices have now fallen for 10 months in a row and lost 10.3 per cent of their value since the beginning of the year, to leave the average property costing £164,654.

Fionnuala Earley, Nationwide's chief economist, said: "While the pace of monthly falls picked up during the month, the less volatile three month on three month measure eased very slightly in August to 4.5 per cent from 4.6 per cent in July."

She said recent activity levels in the market had been "very subdued", although she added that data from estate agents suggested that some "glimmers of interest" were returning to the market, possibly as a result of price falls and the opportunity buyers had to negotiate big discounts.

On a brighter note, she said that while there was still a great deal of uncertainty, the Bank of England's forecasts for growth and inflation have been widely interpreted as opening the door to rate cuts.

She said market rates had responded to this, and as a result mortgage rates, particularly fixed-rate deals, had come down.

The data from Nationwide comes as up-market property firm Savills said profits in its estate agency business slumped 88 per cent during the first half of the year.

Savills said there had been a "significant" fall in sales volumes, both in the UK commercial and residential markets, thanks to the continuing credit squeeze.

Underlying pre-tax profits at the group's core division fell to £2.5 million during the six months to June 30, compared with £20.9 million the year before. Revenues were down 22 per cent to £105.3 million, with weakness also cited in Europe and the US.

The group said transaction volumes were down 45 per cent in the London housing market during the period, with prices 7 per cent lower. Prime country property was initially less affected than in the capital but is is now following suit, it added.

Savills' overall underlying profits, including operations in Asia, were 41 per cent lower at £19.2 million during the period, with revenues 2 per cent lower at £278.1 million.