House prices fell by 1.2 per cent during February, adding to speculation that the recent recovery in the property market may have run out of steam, Government figures showed yesterday.
The Office of the Deputy Prime Minister said the average UK property cost £183,224 during the month, down from £185,404 in January.
At the same time the annual rate of house price growth slowed to 3.6 per cent, compared with 4.3 per cent in the previous month. The fall was largely driven by a 4.6 per cent drop in the price of flats, while the cost of a detached home was also 1.2 per cent lower and the price of bungalows fell by 1.1 per cent.
The ODPM's figures, which are not seasonally adjusted to take into account the time of year, recorded a 0.5 per cent drop in house prices during February 2005.
Economists had warned that the mini revival in the housing market may be coming to an end after both the Bank of England and the British Bankers' Association reported a drop in the number of new mortgages approved during February.
Other house price indexes have also reported a mixed picture this year, with Nationwide Building Society saying prices rose by 1.1 per cent during March after stalling during February.
It added that there were some signs that demand may be softening.
Last week Halifax said prices rose by 0.9 per cent during March, but it added that the level of activity in the market may be "levelling out".
Ross Walker, of the Royal Bank of Scotland, said yesterday: "The ODPM house price data provided some tentative evidence of moderating demand. Fundamentals suggest the upside for house prices remains limited."
The annual rate of house price growth fell in half of the UK's 12 regions during February, according to the ODPM.
Rises continued to remain strongest in Northern Ireland and Scotland, which both reporting increases in annual house price inflation to 15.8 per cent and 11.5 per cent respectively.
In England the housing market remained strongest in northern regions, with Yorkshire and Humberside reporting a gain of 8.6 per cent during the past 12 months, while in the North West prices increased by 7.8 per cent and in the North East they were seven per cent higher. The West Midlands saw prices rise by 3.5 per cent in the same period.
But in southern regions annual house price inflation was below two per cent in all areas, with the rate in London falling to 1.9 per cent from 5.3 per cent in January.
In the East, prices are now 0.9 per cent lower than they were in February 2005. The annual inflation rate has been negative in this region every month since October, apart from during January.
But the subdued month was good news for first-time buyers, who saw the average cost of their first home fall by 1.2 per cent to £141,069.