This brings the average price to £169,316, almost £15,000 less than this time last year and its lowest level since August 2006.
House prices have now been falling for nine consecutive months, but on average are still almost £100,000 higher than three years ago.
Chief economist Fionnuala Earley says: “Estate agents are reporting up to 40 per cent of transactions falling through and the average number of sales per surveyor is at its lowest ever level.
“This could be partly due to the availability of finance but the Bank of England agent’s report suggests that this may also be due to the reluctance of sellers to accept lower offers. While this does little for liquidity in the housing market, it does indicate that sellers are largely not in a position where they are forced to sell.”
She adds: “As the cost of mortgages begins to come down, activity could be bolstered and restore some liquidity to the housing market. However, this is not likely to happen overnight. Overall the weakening economy and poor housing market sentiment do not suggest that the market will recover quickly. But, if oil prices continue to fall and the MPC is satisfied that its inflation credentials are intact, the possibility of earlier rapid cuts in interest rates increases. which would be good news for borrowers.”