House prices still slowing down

Prices rose by 0.9% in January, taking the average property price to £186,045.

However, the annual rate of increase continued to slow, to 6.4% in January from 6.7% in December, the fifth such fall in a row.

The figures confirm the picture from all other surveys, which indicate the housing market has undergone a sharp slowdown since last summer.

The Land Registry figures show that prices in London are still rising at an annual rate of 13.1%, almost twice the rate for England and Wales.

But the capital has not been immune from the general slowdown.

"The downward trend in annual growth rates nationally is also visible in the data for London, although London growth rates continue to be stronger than those of England and Wales," said the Land Registry.

Tougher lenders

Overall the volume of sales has dropped steeply in the past year, down in England and Wales by 22% between November 2006 and November 2007.

The demand for mortgages has dropped under the impact of previous interest rate rises, judging by recent figures from the British Bankers' Association and the Bank of England.

Lenders are now becoming much more fussy about who they lend to because of the crisis in the banking industry.

This has caused a shortage of funds for banks and building societies to distribute as mortgages.

Loans that are higher than the value of a home are now almost impossible to come by.

Recently a member of the Bank of England's Monetary Policy Committee, Kate Barker, warned that a drop in lending might contribute to a downward spiral of house prices, which could in turn become a big short-term threat to the UK economy.

Lack of cheap property

The worst-performing area in the past year was Wales, where prices fell by 0.3% in January and went up over the past 12 months by just 1.3%.

The only city or major town where prices have actually fallen over the past year is Nottingham, down by just 0.1%.

By contrast, Reading has seen prices rise by 12% in that time.

The general rise in average prices means it will soon be impossible to find anywhere to buy in the lower price bands that were once commonplace.

In November 2007, the last month for which transaction numbers are available, there were just 748 sales for properties valued at less than £50,000 in England or Wales.

That month also saw just 43 properties sold in London for between £50,000 and £100,000, - 66% fewer than a year ago.

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