Average prices dropped 0.3% between August to September continued the negative monthly price change seen in August of -0.1%.
London remains the only region in England and Wales to experience an increase in its average property value over the past 12 months with a movement of 2.7%.
The North East experienced the greatest annual price fall with a decrease of 8.2% and the most significant monthly price fall with a movement of -3.9%.
The most up-to-date figures available show that during July 2011, the number of completed house sales in England and Wales decreased by 11% to 59,919 from 67,475 in July 2010.
Peter Maskell, director of the Sussex-based estate agents Brock Taylor, said: “As yet another month of house price stagnation is confirmed, about the best we can say is that it could be worse.
“The key reason for the steady drift in prices is a market which is becoming increasingly polarised between motivated, must-sell vendors - and the rest.
“While the number of new instructions is tailing off, many of those putting their houses on the market now are pricing aggressively.”
Maskell said that many would be motivated by the “three d’s” – death, divorce or debt in the family.
“Their desire for a quick sale will often force them to set prices low,” he added.
“Sellers who put a property on the market a while ago and who still hope for a better price are seeing them stay on the shelf much longer - sometimes for many months.
“So many estate agents are finding that they have stock hanging around their books for long periods. And without an impetus from the market, many will be stuck with these unsold homes for a while yet.”
Nicholas Leeming, business development director at Zoopla, said: “The annual fall in the number of house sales is proof that the dark cloud of economic uncertainty is still causing people to stay out of the property market.
“And the continued fall in average prices provides further evidence of sellers having to reduce prices in order to tempt buyers into transacting.”
Leeming said that even those at the top end of the market were feeling the pinch with the introduction of the £1m stamp duty threshold contributing to the annual fall in property transactions at this level.
“Only a combination of revitalised confidence in the UK’s economic prospects and further efforts from lenders to assist first-time buyers will help reignite the market,” he added.
“Unfortunately, this is unlikely to happen until well into next year.”
