Today's Nationwide House Price Survey showed Northern Ireland had the slowest annual house price growth in the UK — down by 18.6% in the second quarter of 2008.

According to its findings, the average house price in the province is now £183,476.

A Nationwide economist said the province's property boom of 2006-07 took the housing market here to unsustainable levels and vulnerable to the credit crunch. Fionnuala Earley said: "We are now seeing the consequences of that excess vulnerability."

Despite the downturn, Northern Ireland has the fifth highest average price in the UK, with London still holding the number one spot with prices in the capital at £285,568 on average.

And while Belfast topped the UK league of hottest regional cities at the height of the boom, it is now the second coolest city nationally, with a 11% drop in annual house price growth.

The average property price in Belfast is now £268,174, which is still the most expensive in the province.

And the west of the country, including Londonderry, experienced the strongest annual price change falling from plus 4% in 2007 to minus 10% this year.

Fionnuala Earley, Nationwide's chief economist, said: "Northern Ireland continues to show by far the steepest correction in house prices across the UK. Prices in the province were down by 18.6% year on year in the second quarter, following a fall of 3.4% year on year in the first quarter."

And Keith Mitchell, partner with estate agent Templeton Robinson, said: " The situation seems much worse because our housing market has behaved abnormally over the last few years as prices escalated to what would have been considered normal or average prices in the rest of the UK."

Mr Mitchell said property prices here escalated at an "incredible rate" over a relatively short period.

"This was of course unrealistic and unsustainable, and combined with a supply and demand issue, prices boiled over so the current slowdown in the market, regardless of the global credit crisis, was in fact inevitable," he added.

There are 28,000 houses for sale in Northern Ireland compared to 4,000 at the height of the boom so supply and demand is now reversed, according to the estate agent, who claimed prices have "bottomed out" in some areas such as new build homes.

"My advice to sellers is to accept that the boom is over," said Mr Mitchell.

Ms Earley's evaluation backs up Mr Mitchell's claims. She pointed out the recent falls come on the back of unusually sharp increases in prices during 2006-07. "Within the space of these two years, prices in the province had grown by 79%. These increases were clearly not sustainable and left the market in Northern Ireland particularly vulnerable to external shocks such as the financial market downturn that began last August."

She added, however, even with the last two quarters of very large falls, the price of a typical property in Northern Ireland is still higher than at the end of 2006.

Nationally house prices fell by 0.9% in June, less than half the rate of the previous month.

Meanwhile, figures from the Bank of England also released today show that first-time buyers have almost completely disappeared from the UK mortgage market. The number of mortgages approved by banks and building societies fell to an all-time low last month. Only 42,000 loans were handed out in May — down from 58,000 in April and a drop of 64% compared with this time last year when 116,000 mortgages were given to homebuyers.