Asking prices have fallen for the third month in a row by 0.8% (£1,968), but interest from buyers is up due to lower prices and recent falling interest rates.

A good deal of the monthly fall is attributed to the final HIPs’ (home information packs) deadline for smaller homes, which has brought more cheap properties to the market.

It is not all gloom and doom, however, as the January housing market seems to be showing signs of its usual upturn after several months of sellers re-adjusting their prices, according to theproperty website Rightmove’s latest House Price Index.

‘Now, some house-buyers are able to find properties that have fallen into their affordability zone and are bagging what they see as bargains against previous prices.

‘Some properties have had their prices dropped by 10% or more and are now within reach, satisfying some of the pent-up demand from previously disenfranchised buyers,’ says Miles Shipside, commercial director of Rightmove.

The drop in the annual rate of increase from 4.8% to 3.4% has resulted in the lowest year-on-year figure for two years, mirroring the 2005 property market downturn.

A sustainable recovery to a volume sales market requires the return of more first-time buyers or buy-to-let investors, and a lowering of costs for existing home-owners to trade up, adds Rightmove.