Official data has indicated that house prices dropped by an average of 0.1 per cent in February.

The figures, from Communities and Local Government (CLG), show that average prices dropped from £205,399 in January to £205,102 in February.

However, the annual improvement for the month was a considerable 12.1 per cent, up from a 10.9 per cent rate of growth recorded in January.

Falls in the prices of terraced and detached housing as well as bungalows were thought to be widely responsible for the dip.

"There are limited signs at best that house price inflation is beginning to slow and prices currently remain pretty elevated," remarked Howard Archer of Global Insight.

"Despite the tentative signs that housing market activity may have peaked and buyer interest is beginning to wane, an acute shortage of properties means that pricing power is still largely in favour of the vendor in many areas," he added.

The slowest rates of growth were recorded in the Midlands, the Humber, Yorkshire and the north-west.