Figures show more house price gloom

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The month-on-month fall compared to a rise of 1.6% between May and June last year.

The figures from the Department for Communities and Local Government (CLG) showed the annual rate of growth slowed to 0.6% in June, down sharply from the 3% seen in the year to May.

The CLG house price index data contrasts with recent hefty falls in the annual rate of growth indicated by lending giants Halifax and Nationwide as the CLG's index is calculated at the time when transactions are completed.

But the figures highlight the marked slowdown being seen in the housing market, with a decline in the rate of growth in all countries in the UK.

In England, the annual growth rate fell from 3.1% in May to 0.5% in June, while the rate in Scotland declined from 5.9% in May to 5.7% in June. Prices fell year-on-year in Wales and Northern Ireland, by 1% and 9.4% respectively, according to the CLG.

The average house price in the UK now stands at £215,029, down from £216,625 in May.

The CLG said the average price paid by first time buyers was £159,606 in June, while the typical price paid by former owner occupiers was £247,917.

A CLG spokesman said: "The current issue affecting the market is largely about the supply of credit - a very different situation to the early 90s which was about high interest rates and unemployment.

"The long-term demand for housing remains high and the fundamentals of the economy are sound with low unemployment and historically low interest rates."