House prices continued to fall this month as potential buyers stayed away from the market until the outlook becomes clearer, figures showed today.
The average cost of a home in England and Wales fell for the fourth month in a row, dropping by 0.3 per cent to £174,700 during the month, property website Hometrack said.
The annual rate of growth also continued to fall, easing to just 2.3 per cent in January, down from 3.6 per cent in December and the lowest level since June 2006.
At the same time the number of new buyers registering with estate agents continued to fall, dropping by 11.5 per cent during the month, following falls of 7.9 per cent and 9.1 per cent in December and November respectively.
There was also a shortage of homes coming on to the market, with 4.6 per cent fewer properties put up for sale than during the previous month, causing levels to be 10 per cent lower than six months ago.
Unsurprisingly, the lack of activity in the market led to an increase in the amount of time a home takes to sell to eight-and-a-half weeks, the highest level since the survey first began in 2001, with homeowners now getting just 93.5 per cent of their asking price.
Richard Donnell, Hometrack's director of research, said: "Weak confidence among would-be purchasers continues to put downward pressure on house prices although the scale of the recent falls is relatively small when put in the context of gains over the last few years.
"Underlying prices are still being supported by a continued tightening in the supply of homes for sale, a trend that is likely to continue.
"The short-term outlook for market activity hinges as much around the outlook for UK interest rates as it does the outlook for financial markets."
The group said people's unwillingness to either buy or sell property meant there was likely to be a continued lack of homes coming on to the market, which would support prices in the short-term.
But it said the turmoil in world equity markets during the past week will have done little to encourage activity, while comments by the Governor of the Bank of England Mervyn King may put a question mark in people's minds about the timing of any future interest rate cuts.
Mr Donnell said: "With most buyers also being sellers, households are now waiting until there are signs of general stability before committing to the market. "Wait and see is likely to remain the default position of most homeowners unless they need to move."
London and the South-west saw the steepest price falls during January, with the average cost of a home in both regions falling by 0.4 per cent.