There was a 2.6% fall in average house prices in November according to the latest Halifax house price index, bringing the annual change on this index to -14.9%. The UK average house price is also now the same level as it was in July 2005 – £163,445) although it is still 124% higher than ten years ago and more than £90,000 higher than in November 2008.

The activity in the market last month showed signs of stabilising, says the report, as the number of mortgages approved was broadly unchanged for the fourth successive month.

Demand for housing is being constrained by pressures on incomes and reduced availability, but there are signs that these are beginning to ease as food and fuel prices ease, and interest rates continue to drop.

Halifax Chief Economist Martin Ellis said activity could well pick up: ‘Lower house prices mean that a key housing affordability measure – the house price to earning ratio – is at its most favourable for over five years at 4.56. There are also signs that the pressures on incomes may be beginning to ease. Retail price inflation has started to decline and is likely to fall significantly over the coming months, helped by lower energy prices and weaker food price rises.’

The Bank of England is widely expected to lower interest rates today to the lowest level for more than 50 years in an effort to kick-start the economy.