Meanwhile, prices in the month of March were marginally (0.1%) higher than at the end of 2010, with the average UK house price now standing at £162,912.
Prices in March were 2.9% lower than a year ago as measured by the average for the three months to March against the same period a year earlier. This is the biggest annual decline since October 2009.
House sales show signs of stabilising but at a low level.
The number of mortgages approved to finance house purchase – a leading indicator of completed house sales – recovered further from its December low with a 2% increase between January and February on a seasonally-adjusted basis, according to Bank of England industry-wide figures.
Approvals were virtually unchanged compared with February 2010, at 47,000, but were 60% lower than four years earlier (116,700 in February 2007).
Housing economist Martin Ellis said: "House prices continue to fall at a modest pace as measured by the quarterly rate of change, the best measure of the underlying trend in price movements. Prices in the first quarter of 2011 were 0.6% lower than in the fourth quarter of 2010. There was a 0.1% rise in prices in March and prices were a similar amount above those at the end of 2010.
"The overall decrease in prices in the first quarter of 2011 compared with the previous quarter was a little lower than the quarterly falls recorded in the third and fourth quarters of 2010. The recent increase in employment, particularly those in full-time jobs, may have been an important factor supporting the market.
"Our forecast remains for a 2% decrease in house prices in 2011 as a whole. Uncertainty over the general economic outlook and individual financial circumstances are likely to constrain housing demand, resulting in some modest downward pressure on prices."
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