House prices dropped 10 per cent in 2008

The Communities and Local Government department’s House Price Index shows the average price of a home fell to £195,317 in December, down 2.3 per cent on the previous month.

First-time buyers have benefited from greater reductions than homeowners, paying an average of 13 per cent less than a year ago compared with a 9.2 per cent reduction for those already on the property ladder.

England and Wales saw similar levels of decline, at just over 10 per cent, but prices fell by 17.9 per cent in Northern Ireland, and 6 per cent in Scotland.

Across the English regions the price falls varied from 8.9 per cent in the north east to 11.5 per cent in the east midlands. London remains the most expensive area, with an average price of £304,421, and the north east is the cheapest at £136,057.

Two more recent house price surveys, from mortgage lender the Halifax and information company Rightmove, have suggested a slight increase in prices in January. But both stressed this is unlikely to indicate the start of prolonged growth.

The CLG said its data is ‘not directly comparable’ with other indicators due to variations in the way prices are measured, and geographic coverage.