House prices fell for the fourth month in a row during February, dropping by 0.5 per cent, Britain's biggest building society said today.
The fall helped pull the annual rate of price growth down to just 2.7 per cent, its lowest level since November 2005, and well down on January's figure of 4.2 per cent.
Nationwide said it was the first time since 2000 that house prices had fallen for four months in a row.
But despite the slide, the average home in the UK is still worth £179,358, having gained around £12.75 a day during the past year.
Fionnuala Earley, Nationwide's chief economist, said: "The trend in prices is clearly weakening, but the size of the drop in the annual rate between January and February perhaps overstates the rate of cooling, as it partly reflects the particularly strong increase in prices in February last year.
"The three-month on three-month rate of price growth rate fell to minus 1 per cent in February, down from minus 0.4 per cent the previous month."
The Nationwide data, which shows house prices to have fallen by 2.3 per cent since the beginning of November, is considerably more gloomy than some other recent indexes have been.
The Land Registry yesterday said house prices in England and Wales rose by 0.9 per cent during January.
Property website Rightmove recently said prices in England and Wales surged ahead by 3.2 per cent during the four weeks to 6 February, although the group cautioned against reading too much into the rise, saying it was likely to have been distorted by the final roll-out of the controversial Home Information Packs.
But property information group Hometrack said house prices in England and Wales fell for the fifth month in a row during February, while annual house price growth dropped to just 1.4 per cent.
Nationwide said the softening in house prices during February was not unexpected given the falls in demand that have been seen recently, with mortgage approvals for house purchases falling back sharply since the autumn.
The group said reluctance on the part of buyers to enter the market was not surprising given the current uncertainties, and it is unlikely that activity will return to trend levels for some time.
But it added that while there were several factors that were slowing housing market demand, including stretched affordability and lenders tightening their lending criteria as a result of the credit crunch, the fact that the UK did not seem to be heading for a recession would provide some support.
Ms Earley said: "Overall, it seems clear that we will not see recent rates of growth, in either the UK economy or housing market, repeated for some time.
"There is currently an unprecedented amount of uncertainty about future economic conditions, but if the Bank of England's central projection that the economy continues to grow is correct, conditions for the UK housing market are perhaps less gloomy than some would have us believe."Reuse content