Prices in the fourth quarter fell in all regions except the north of England, which saw a 3.04 per cent rise, according to data from the Land Registry. In Greater London prices fell by an average of 3.89 per cent.
After an initial boom, most prices fell steeply in the last quarter of the year as a weakening economy caused the property market to slow down. Fewer houses were bought and sold, with the number of transactions falling by 14 per cent.
Some traditionally "des res" areas suffered price falls over the whole year, according to the Land Registry. The average price of a home in the London borough of Kensington and Chelsea fell from pounds 289,739 to pounds 280,977, while the average price in Camden slipped by pounds 1,000 to pounds 196,658. Year on year, the price of the average house in England and Wales still rose by 5.88 per cent, with the biggest rises in Greater London and the South- east.
Mortgage lenders advised caution over the Land Registry figures, saying they do not take account of seasonal factors such as the traditional slowdown in the housing market at the end of the year.