House prices fell by 0.3pc in September, wiping just £594 off the cost of the average home, according to the latest LSL Property Services/Acadametrics House Price Index.
This ends a two-month run of modest rises, but on an annual basis the cost of the average home has slipped by 2.3pc – or an average of £5,240 – over the past year.
According to research, the average home in England and Wales is now worth £218,650. The largest monthly growth was recorded in Greater London, with a monthly increase of 1.1pc.
Dr Peter Williams, housing market specialist and chairman of Acadametrics, said: "This monthly fall is small and, when combined with the positive movements in July and August during the quarter, means that the housing market is probably best described as 'stationary'."
The average price of a property has increased by 9.2pc since the trough of the last housing recession in April 2009 – an increase of more than £18,400. However, it is still 5.7pc below that of house price peak of February 2008.
"It is possible that the housing market will continue to remain more or less stationary over the next three months, giving an out-turn of approximately -2.5pc for the year as a whole – roughly in line with a number of forecasts published by HM Treasury in August," said Dr Williams.
However, Dr Williams said that a rapid tightening in the supply of credit and the emergence of renewed tensions around the banking sector, means that the likelihood of a double dip recession has increased and confidence remains very low.
David Newnes, director of LSL Property Services, said: "The modest summer recovery came to an abrupt end in September, reminding us there are still serious barriers to a sustained property market recovery."
Mr Newnes pointed out that it is not all doom and gloom for home owners as buyer activity is higher than average for this time of year while mortgage finance is cheaper than ever before.
"That's not to say the road to recovery is obstruction free," he said.
"Mortgage lenders' willingness to lend at record low rates is based on expectations that the MPC will keep rates low for the foreseeable future and that the Eurozone crisis won't become a disaster. While it's probable these conditions will continue, it's far from certain." -By Kara Gammell,14 Oct 2011