House prices fell by 1.5 per cent in October, wiping about £2,500 off the value of an average property, and resulting in a 10.1 per cent drop in a year, official figures show.

Figures from the Land Registry, which reflect the actual prices paid for houses rather than mortgages approved, show that the value of the average home in England and Wales has dropped to £165,529 in the last 12 months.

The figures from the Land Registry are based on sale completions and therefore lag surveys by mortgage lenders which are based on mortgage approvals. These surveys show annual declines of up to 15 per cent.

Nationwide building society revealed yesterday that based on its mortgage approvals, house prices fell 0.4 per cent, or £430, during November - the slowest decline in a year.

The malaise in the housing market was underlined as the Land Registry said that the number of transactions also plunged to a new low, with only 45,437 sales being completed in August, 64 per cent lower than the same period last year. The lack of new buyers in the market is leading some sellers to slash their asking prices in the hope of attracting an offer on their home.

Those living in flats saw the value of their property fall by about £3,500 during the month, while owners of detached properties lost £4,000, according to the figures.

It was the 14th month in a row that the annual rate of growth has declined, leaving property costing around the same as it did in the summer of 2006.

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