The property market will not improve until mortgage lending picks up, a leading UK lender has said.

Data published by Nationwide today showed that house prices fell by 1.3 per cent this month, taking the average annual rate of decline to 16.6 per cent.

Martin Gahbauer, senior economist, said there has been only a small improvement in mortgage lending since levels hit a record low in November.

"We would not expect to see a stabilisation of property prices until approvals recover significantly from current levels,"he added.

The findings come as many would-be homebuyers are switching to rented accommodation because they cannot get a mortgage to buy their own home.

Earlier this month the Association of Residential Letting Agents said the private rent sector is providing housing solutions for Britons affected by the recession.

However, with unemployment expected to increase in 2009, landlords might consider stepping up their credit and reference checks to ensure they receive relatively-reliable tenants.ADNFCR-2002-ID-18998172-ADNFCR

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