House prices fell for the second month in a row in August, and by nearly 1%, the Nationwide building society said. Its report is in line with Hometrack but out of skelter with the Land Registry, which reported a small price rise in July.
Prices fell 0.9% last month following a 0.5% decline in July, according to the Nationwide. It was the first time that Nationwide has reported falling prices over two consecutive months since February 2009.
The average house price now stands at just over £166,500, says Nationwide, which bases its price index on mortgages agreed.
Nationwide said house prices had "essentially stagnated over the summer", bringing down the annual rate of house price inflation to 3.9% – a sharp fall from the 6.6% seen in July.
Martin Gahbauer, Nationwide's chief economist, said: "As more sellers have returned to the market, buyers have a greater selection of properties to choose from and more bargaining power with which to bid down asking prices."
He went on: "Given that the price increases of the last year had gotten ahead of the recovery in the wider economy, the current correction is not an unhealthy development."
The Government is so concerned at the number of contradictory house price indices that it has asked its chief statistician to investigate.
