DCLG report reveals further price slip

Despite a 0.1 per cent price rise in October 2007, the DCLG saw house price inflation drop down to 9.5 per cent.

The more reliable three-month indicator saw the average for the three months to November also falling from 11.1 per cent to 10.5 per cent.

"The traditional Christmas slowdown came early last year - price indices show varying degrees of cooling in November but they all agree that transaction levels are low, " reflected Nicholas Leeming, major client director of propertyfinder.com.

"First-time buyers are benefiting from increased bargaining power and are succeeding with opportunistic bids on their first home, but high mortgage costs and falling confidence are causing many people to delay buying a home."

Ross Bowen, managing director of Connells Survey & Valuation added that the Bank of England needs to act quickly: "Although it's yet to show up in official figures, our data shows mortgage approvals fell very sharply in December.

"If we're to avoid the current doldrums having a serious and fundamental impact on the economy, the MPC must act swiftly - only further interest rate cuts will help restore confidence to the housing and financial markets."