Nationwide: UK house prices down 0.1%

House prices in the UK fell by 0.1 per cent during January, according to the latest house price survey from Nationwide.

This is the third consecutive monthly fall in average property prices, following drops of 0.5 and 0.8 per cent in December and November respectively.

As a result of the decline, annual house price growth fell back to 4.2 per cent, the lowest figure since December 2005, and down from 4.8 per cent on last month.

According to Nationwide the average price of a property in the UK is now £180,473.

"The weakening trend in house prices during the last three months is consistent with the loosening in housing market conditions that has become increasingly evident in the data," said Nationwide's senior economist, Martin Gahbauer.

"Key indicators such as mortgage approvals and the sales-to-stock ratio have now fallen close to or even below the troughs reached in late 2004, a period that was followed by a year of very subdued price growth."

Nationwide expects the market to continue its freeze in the coming months following the recent trend.

Commenting on the figures David Stubbs, RICS senior economist said: "Today’s numbers confirm the continuing slowdown in the UK housing market. With activity weak, the market is becoming looser and tilting the balance of power away from sellers and towards buyers.

"However, conditions in the mortgage market need to improve if the thousands of would-be first time buyers out there are going to be able to get their foot on the ladder in coming months."

The findings follow yesterday's announcement from the Bank of England revealing mortgage approvals fell to a record low of 73,000 in December – a key indicator of the future direction of the market.

Analysts are now predicting interest rate cuts in an attempt to shore up the market.

"It is clear the housing market has started 2008 as it ended 2007, under substantial pressure from increased affordability pressures and tightening lending practices," said Howard Archer, of Global Insight.

"This adds to the already intense pressure on the Bank of England to cut interest rates by at least a further 25 basis points to 5.25 per cent next week, and to enact further reductions thereafter."