Halifax has said that house price growth is continuing to slow, with prices in the UK falling by 0.3 per cent in February, according to its latest monthly survey.

The survey results mean that the annual rate of house price inflation has dropped from 4.5 per cent to 4.2 per cent. Halifax says that the average house in the UK now costs £196,649.

Both Halifax and Nationwide Building Society have predicted that house price inflation would drop to zero during 2008.

Martin Ellis, chief economist at Halifax, said, House prices fell by 0.3% in February. Prices in the three months to February, however, were marginally (0.2%) higher than in the previous quarter, reports the BBC.

Ellis continued, Whilst the housing market has slowed over the past six months, it is supported by sound economic fundamentals.

Interest rate cuts by the Bank of England are also helping to underpin house prices.

Halifax said that activity in the UK property market had declined significantly in the last year and pointed out that there had been a 39 per cent drop in new mortgage approvals for buying homes.