LONDON, September 4, 2008 (AFP) - House prices in Britain fell by 10.9 percent in August compared with the same month a year earlier, the biggest drop in 25 years, home loan provider Halifax said Thursday in its monthly report.

Halifax, part of British banking group HBOS, said it was the sharpest 12-month drop since the series began in 1983.

Prices dropped by 1.8 percent in August from July -- the fifth month running that they have fallen by at least 1.5 percent.

The average cost of a property in Britain fell to 174,178 pounds (213,781 euros, 310,450 dollars) in August.

'The pressure on householders' income, together with the reduction in the availability of mortgage finance due to the global financial markets crisis, is resulting in both lower property prices and activity levels,' Halifax said in its report.

Capital Economics analyst Seema Shah said that prices were set to tumble further as a recent slump in mortgage approvals had yet to be fully reflected in house price data.

'Ultimately, with neither the economy nor the labour market likely to offer any support to the housing market over the next year or two, and cuts in mortgage rates almost irrelevant in the face of tight lending criteria, it is difficult to see what will put an end to this correction,' Shah added.