After recording no monthly change to prices in September, the building society also said there was a monthly fall of 0.7% in October, bringing the average house price to £164,381.
Annually, house prices are still rising with October seeing a year on year uplift of 1.4% - lower than September’s annual rise of 3.1%.
Martin Gahbauer, Nationwide's chief economist, said: "October saw a continuation of the modest downward trend in house prices that began at the start of the summer.
“The three month on three month rate of change - a smoother indicator of the recent price trend - fell to -1.5% in October from -1.0 % in September. This is the largest decline over three months since April 2009, but is still well below the 5-6% rates of decline on the three month measure seen during the second half of 2008.
“If the recent trend in house prices were to continue through November and December, the annual rate of house price inflation would drop to between 0% and -1% by the end of 2010. This would compare to a rate of +5.9% at the end of 2009."
Research house, Capital Economics, said it expected further declines.
“The fact that house prices now appear to be on their way back down after the past year’s rather unexpected surge should not be a surprise,” it said. “Not only is the market overvalued on most measures, but house price falls are entirely consistent with the drop in buyer enquires and mortgage approvals that we have seen in recent months. They also square with reports that lenders have begun to tighten credit standards again.”
Catherine Penman, head of research at Carter Jonas property consultancy, said: “The market has softened over the past month but we have yet to see any evidence of a price collapse. Prices are edging down but they have not gone over the edge — and nor do we expect them to.
"Although demand is weaker than it was earlier in the year, as long as interest rates remain at or around their current level and mortgage finance as competitive as it is at lower LTVs, there will continue to be demand for property.
"Prices at the lower end, where mortgage finance at higher LTVs is harder to secure, are under more pressure than prices at the mid to top end. At the top end of the market, the market is proving particularly resilient.
"Looking forward, we expect a far higher degree of correlation between property prices and the economy. If the economy strengthens, so will the property market, if it weakens, expect prices to fall."
