Latest figures show prices down 0.5% and buyers down 9.5%

House prices have fallen by a further 0.5% in January, according to the latest data from housing statistics firm Hometrack.

The fall is the seventh monthly fall in a row, and has been matched by a steep decline in the number of new buyers in the month, down 9.5% on December. In addition the number of homes on the market fell by 5.4%, the biggest monthly fall for four years.

Hometrack said the steep declines seemed likely to represent more than the usual seasonal slowdown in January.

Richard Donnell, director of research at Hometrack, said: “There are no signs of a new year bounce for the housing market as 2011 begins with a sluggish start.

“Over the last six months the Hometrack survey has recorded a 26% fall in demand, with January posting a 9.5% decline. A seasonal fall is not unexpected at this time of year, but compared to 12 months ago – January 2010 saw a 2.7% fall in demand - the underlying weakness is far more pronounced at the start of this year (2011).

 “As we head into the year, property prices are set - in the short term - to remain under downward pressure. Household budgets being squeezed by increased taxation, will be stretched further if concerns over rising inflation translate into higher interest rates. In short, demand for housing is, over the coming months, likely to fall further.”