More gloom for the UK housing market came today as figures from the Halifax showed prices were unchanged last month and the three-month trend was down by 1 per cent.

The Halifax numbers follow those from the Nationwide which indicated a 0.1% month-on-month fall in January, the third successive monthly decline.

Halifax is sticking with a forecast of flat house prices nationally throughout this year.

However, Martin Ellis, Halifax’s chief economist, dismissed wholescale price falls predicting instead “sound economic fundamentals and lower interest rates to support house prices”.

On the likelihood of Bank of England rate cuts Mr Ellis said: "There will certainly be one this week and we expect another one, possibly more depending on the state of the economy."

The Bank last cut interest rates in December from 5.75 per cent to 5.5 per cent. Mr Ellis said he expected the Bank to continue with quarter point cuts, "taking a cautious approach" rather than following the US Federal Reserve's approach of half point or more cuts to US interest rates.

A quarter point cut in interest rates in the summer of 2005 kick-started a boom in house prices but Mr Ellis ruled out a repeat of that scenario this time round. "Affordability has not improved - house prices are still expensive relative to earnings."

Many housing analysts are however still expecting house prices to fall this year as a number of highly geared homeowners are forced into so-called distressed sales.

Economic analysts Global Insight predicts house-price deflation of 5 per cent this year and next. Capital Economics predicts prices to fall 5 per cent this year and 8 per cent in 2009.

House prices have soared by 182 per cent over the past decade – almost trebling from £70,000 at the end of 1997 to an average £197,244 in January.

House prices peaked last summer when Halifax reported 11.4 per cent annualised growth over the three months to August 2007. Halifax now puts the annual rate of house price inflation at 4.5 per cent and Nationwide at 4.2 per cent, the lowest level since December 2005.

Latest Bank of England figures show that mortgage approvals fell to a record low of 73,000 in December.