British house prices suffered a monthly fall for the first time in three years in October, according to a survey by the Nationwide building society. It is seen as one of the clearest signs yet that the property market boom is over.

The cooling in house prices follows five Bank of England interest rate hikes since last November and analysts said the report would probably make policymakers think twice before raising rates further above 4.75 per cent.

Property prices fell 0.4 per cent in October compared with the month before, the first drop since the month after the September 11th, 2001 attacks on the United States and the biggest monthly fall since February 2001, Nationwide said.

This took the annual rate of increase down to 15.3 per cent from 17.8 per cent in September and was the weakest since January. British house prices were flat over the past three month period.

Most analysts are now convinced the BoE will leave rates steady for the remainder of the year and some have even been speculating about possible interest rate cuts next year, particularly if the housing market cools even more rapidly.

"Prices need to fall by around 20 per cent to put the market back on a more sustainable footing," said Mr Ed Stansfield, economist at Capital Economics. "We expect price falls, such as that reported by the Nationwide today, will be the dominant trend of the next two to three years."

The closely watched Halifax house price index also reported a fall in August but that was reversed in September. The October Halifax house price index will likely be published early next week but a release date has not yet been set.

Other measures of British house prices, which are not adjusted for seasonal trends in the property market have also recently shown falling house prices.