Property prices continued to fall in January as potential buyers got cold feet…

The average cost of a home in England and Wales fell for the fourth month in a row, dropping by 0.3% to £174,700 during the month, according to property website Hometrack. The annual rate of growth also continued to slip, easing to just 2.3% in January, down from 3.6% in December and the lowest level since June 2006.

At the same time the number of new buyers registering with estate agents continued to fall, dropping by 11.5% during the month, following falls of 7.9% and 9.1% in December and November respectively. There was also a shortage of homes coming on to the market, with 4.6% fewer properties put up for sale than during the previous month, causing levels to be 10% lower than six months ago.

Confidence ‘weakening’

The lack of activity in the market led to an increase in the amount of time a home takes to sell to 8.5 weeks. That was the longest since the survey first began in 2001, with homeowners now getting just 93.5% of their asking price.

Richard Donnell, Hometrack's Director of Research, commented: "Weak confidence among would-be purchasers continues to put downward pressure on house prices. However, the scale of the recent falls is relatively small when put in the context of gains over the last few years".

London and the South West saw the steepest price falls during January, with the average cost of a home in both regions falling by 0.4%. Prices went down in all regions of England and Wales during the period - except the North, where they remained static.