Residential house prices fell slightly for the second consecutive month, according to Hometrack. Average values fell by 0.2% in November following a 0.1% fall in October with the annual rate of growth falling back to +3.6%, the lowest rate of growth since July 2006.

Prices fell across 20% of the country with half these falls concentrated in southern England where demand has decreased the most over the last few months. Since July, buyer registrations in London, South West and the East were down by over a third, while in the South East they were down by closer to 40% over the same period.

The downward pressure on prices is greatest in these southern regions where the market is slowing off a high base after very strong market conditions seen over the first half of 2007. Prices were down by 0.2% in London, the South East and South West with above average falls in the Central London and City area (-0.5%) and South West London (-0.4%).

Richard Donnell, Hometrack’s director of research, said: “As a result the Christmas slowdown looks to have started early but the underlying market conditions remain weak with new buyer registrations down by 26% over the last five months.

“While the downward pressure on prices is coming from the demand side, values are being supported by a continued tightening in supply, with levels of housing for sale contracting by a further 2.9% over November. Most people are now waiting to see if there will be an improvement in market sentiment in the New Year. While the economic fundamentals remain strong, it is hard to see the catalyst for any short term turnaround in market confidence other than interest rate cuts early in the New Year.”