Prices sank by 1.3 percent in September from August -- the smallest monthly drop in the past seven months.
The average cost of a property in
"The ongoing pressures on householders income, combined with the reduction in the availability of mortgage finance ... mean that market conditions will remain challenging,"
Capital Economics analyst Seema Shah predicted that the property market faces further steep falls.
"With the economy set to continue deteriorating sharply and lending criteria likely to remain tight, we think the correction will continue full steam ahead."
Shah added: "The bottom line remains the same: house price falls still have much further to go."