House prices in the West Midlands fell for the sixth month running in January, though less than in December, judging from a survey of property professionals.
This showed chartered surveyors reporting lower prices in the region during January outnumbering those saying they had seen an increase by 62 per cent of the sample - although 25 per cent said there had been no change, up from 16 per cent in December.
The number of inquiries by new potential buyers in the region fell for the eighth month running, and at the fastest pace since last October, according to the Royal Institution of Chartered Surveyors. But this was matched by a similar decline in the number of West Midland homes coming on to the market.
The confidence of local surveyors improved slightly in terms of both house prices and sales, but still remained very low.
"A temporary lack of demand, due to purchasers waiting to see if we add another interest rate cut this month and the recent dip in confidence is clearly behind the slowdown in prices," said Ben Hudson, the RICS's West Midlands spokesman and managing director at Greenhill and Brownfield.
"But January does seem a little better than December and locally we have seen confidence levels improve slightly.
"If mortgage lenders filter the recent interest rate cuts into the market, demand should begin to increase. In the near term, the region's housing market will continue to be shielded from significant price falls."
Across the UK, the balance of chartered surveyors reporting a fall rather than a rise in house prices rose to 54.7 per cent from 49.1 per cent in December.
A separate report from the Council of Mortgage Lenders, said affordability for first-time buyers fell to a 16-year low last year, but recent interest rates cuts should ease the pressure.
First-time buyers typically paid 19.4 per cent of their income in mortgage interest in 2007, the highest since 1991 when it was 21.8 per cent, according to the CML, speaking for both banks and building societies.
The typical income multiples for first-time buyers hit a high of 3.36 times their incomes, more than at any time since the survey began in 1974.
This measure of affordability worsened as the year went on, due to successive interest rate increases up to July. By December, mortgage interest was taking 20.7 per cent of the average first-time buyer's income, compared with 17.9 per cent in December, 2006.
The CML pointed out, though, that these numbers did not reflect two recent quarter-point cuts in the base rate, which should help to ease the pressure this year.
Director-general Michael Coogan said: "Affordability has been stretched further in 2007, but the recent base rate cuts and the expectation of future cuts will ease debt servicing burdens in 2008.
"For first-time buyers, the combination of subdued house price inflation and lower mortgage rates means affordability should ease slowly as the year progresses.
"The impact of payment shock on the large numbers of borrowers coming to the end of fixed-rate mortgages will also be less than we anticipated last year."
Some 1.4 million home-buyers will see their fixed-rate mortgage deals end in the early part of this year. Earlier estimates suggested they would be forced to pay an average of £200 a month more to meet the cost of their home loans.
A record 73 per cent of borrowers took out fixed-rate mortgages in 2007. Take-up dropped towards the end of the year - to 64 per cent in December down from a peak of 77 per cent in June and July - in anticipation of falling interest rates.
Gross lending totalled £364 billion in 2007, up five per cent on 2006. The CML said the rise reflected further advances and buy-to-let lending growth, as opposed to loans for house purchases or re-mortgages.
The number of loans taken out for house purchases fell by almost ten per cent to one million during the year.
"The decline in lending appears to be driven more by funding constraints than lower consumer demand," Mr Coogan added.