House prices continue to fall

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Nationwide said prices eased 0.1% lower during the month to leave the average cost of a home in the UK at £180,473.

At the same time, annual house price growth continued its downward trend, with prices rising by only 4.2% or £7,249 during the past year, the lowest rate since December 2005 and below the previous month's figure of 4.8%.

The group's figures come during a week that has seen a host of gloomy data reported on the housing market.

The Bank of England on Wednesday, said the number of mortgages approved for people buying a home fell to its lowest level since July 1995 during December at only 73,000.

The figure, which was 10% down on November's approvals and below analysts' expectations, suggests that the current slowdown could pick up pace as mortgage approvals take some time to work through into house price changes.

Earlier this week the Land Registry said house prices in England and Wales fell by 0.4% during December, the first drop it has recorded since August 2005, while the Financial Services Authority (FSA) said more than one million mortgages are a "cause for concern" because of their riskier lending characteristics.

There is now little doubt that the housing market is slowing down, with all the major indexes reporting price falls on a monthly basis as stretched affordability and tighter lending criteria from mortgage lenders deter potential buyers.

Nationwide said house prices had fallen by 0.3% during the three months to the end of January, compared with a gain of 0.9% during the previous three-month period.

Nationwide's senior economist, Martin Gahbauer, said: "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."