The average UK house price rose by only 0.1 per cent in January to £135,600 from £134,925, which is a sign of the market stagnating, according to analyst Hometrack.
The company says this compares with the house price inflation peak of 2 per cent in May last year.
In London, prices dropped by 0.1 per cent to £233,200 from £235,529. This is the third consecutive month that prices have fallen in the capital.
Hometrack blames the nationwide slowdown on homes at the top end of the market in London and the South-east dropping in value.
Housing economist John Wriglesworth says: “The housing market is stagnating and, as yet, there is no evidence of any green shoots that would indicate a spring recovery.”
In central London and the City, prices have fallen by 0.4 per cent to £433,000 from £434,800.
In South-east London, prices have dropped by 0.1 per cent to £187,800 from £187,900.
In Berkshire, prices fell by 0.1 per cent to £218,200 from £218,400.
Elsewhere in the country, prices continued to increase, with a rise in Derbyshire of 0.5 per cent to £92,900 from £92,500.
In Cornwall, prices rose by 0.4 per cent to £128,100 from £127,600. In Leicestershire, prices rose by 0.4 per cent to £106,900 from £106,500.
It currently takes an average of 4.8 weeks to sell a home and there are 9.9 viewings per property sold.