This means the price of a typical home is now £162,228.
Commenting on the figures, Robert Gardner, Nationwide's chief economist, said: "Given the challenging conditions prevailing in late 2011, with the UK economy contracting in the final three months of the year, it's not surprising that house price growth softened at the start of 2012.
“The price of a typical house fell by 0.2% in January, taking the annual rate of house inflation down to 0.6% from 1% in December.
"The demand/supply balance may move further in favour of buyers in the months ahead.
“The economy is not expected to gather much momentum until the second half of 2012 at the earliest, which suggests that labour market conditions and buyer sentiment may be slow to improve.
"Nevertheless, with the flow of properties coming onto the market still more of a trickle than a flood, house prices are likely to continue to move sideways or only modestly lower in the months ahead."
Commenting, Ben Thompson, managing director of Legal & General Mortgage Club, said: "It's hardly surprising to see a fall, given how battered consumer confidence has become over recent months.
“The outlook for house prices depends upon many things, some domestic and some very much eurozone. However, the most important single thing the housing market lacks is confidence.
“Until things recover, and the sun comes out again, house prices won't rise in any meaningful way.
“Yes in many areas it's cheaper to buy now than to rent, but that matters little when house prices are stagnant or falling - at the moment for many it's ok to sit tight and wait until things feel better, there is no urgency, financial or otherwise to buy right now.
“At some stage the mood will change, and many tenants will feel they're missing out as house prices rise - we need confidence to return first."
