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Property consultancy Hometrack found that house prices are now at their lowest level since March 2006.
Hometrack's director of research Richard Donnell said the outlook for property demand is set to remain weak as consumers concentrate on the health of the economy.
"The expectation of a forthcoming recession and rising unemployment will further undermine demand for housing and continued price falls are inevitable in the months ahead," he commented.
Although the number of agreed property sales increased by 5.4 per cent, the number of new buyers fell by 3.3 per cent.
Hometrack provides automated valuations and risk analytics services to more than 90 per cent of mortgage lenders in the UK.
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