The price fall has been seen as evidence of a downward trend in the housing market.
The Land Registry’s house price index saw prices fall overall by 0.4 per cent in December, bringing the average house price to £184,469.
However, three regions in England and Wales bucked the downward trend, with the largest monthly growth of 2.2 per cent being recorded in the North East. The East and London also saw house price growth of 1.1 and 0.6 per cent respectively.
Further compounding the fall in house price inflation was the downturn in the volume of transactions on the same period last year.
From July to October 2007, there were an average 103,374 transactions per month, compared to 117,086 per month from July to October 2006.
Nicholas Leeming, major client director at propertyfinder.com, commented: “With unemployment so low and incomes still rising, we are seeing very few forced sellers.
"Instead you get a stalemate between house buyers and sellers and transaction numbers dry up. Sellers refuse to compromise on price and buyers refuse to commit while they fear higher mortgage payments.
“The housing market is an important engine for the economy – as people move, they refurbish their homes and buy goods. And people need to move home in order to take up new jobs and meet their family needs.
"The Bank of England must act decisively to cut interest rates and restore confidence in the economy and in the housing market.”
