The property market is continuing its ?gradual slowdown? according to the Halifax, which has reported a 0.5% fall in the average property price for February, the first decline since November 2004.

According to the mortgage lender, the annual rate of house price inflation also eased last month, falling from 13.7% in January to 12.1% in February, down from a peak of 22.1% in July 2004.

Halifax?s Chief Economist, Martin Ellis, said that although the Bank of England?s latest figures showed a reduction in mortgage lending for February, activity at the front line of the industry seems to be picking up.

?Estate agents are reporting signs of stabilisation in activity. Halifax Estate Agents recorded the first upturn in sales agreed for six months in January: a development that was repeated in February,? he said.

The Economy is strong, Mr Ellis added, with employment figures rising further towards the end of 2004. Nevertheless, interest rates are near their peak.

?A strengthening in the housing and labour markets over the next few months may trigger another interest rate rise. We believe, however, that there will be continuing evidence of a slowdown in both the housing market and consumer spending growth, which could be sufficient to avert another increase in rates and provide scope for the Bank of England to cut rates later in the year,? said Mr Ellis.