The building society said prices had dropped in February due to a combination of the severe winter weather during the early part of the year and the end of the Government’s stamp duty holiday.

The fall brought to close nine months of successive monthly house price inflation, which had seen prices bounce back from 17.6% down on an annual basis a year ago to up 9.2% year-on-year today.

However, the February dip meant that annual house price inflation failed to hit double digits, which Nationwide had forecast it would this month.

The average property is now worth £161,320, according to Nationwide, up £13,500 on a year ago.

Nationwide’s house price index is based on its mortgage approvals and its findings chimed with indications of a slowdown in property market activity in January, which would be expected to lead to less mortgage applications.

The Royal Institution of Chartered Surveyors reported that more members saw a fall in the number of potential buyers registering in January than a rise, while the supply of properties coming on to the market remained in positive territory.

This week, the British Bankers’ Association reported that mortgages approved for house purchase fell to an eight-month low last month, again blaming the end of the stamp duty holiday.

Martin Gahbauer, Nationwide’s chief economist, said:

‘There is evidence from a range of indicators that the market may have lost momentum in early 2010 as the stamp duty holiday ended and house hunters were obstructed by the icy weather.

‘This drop in demand seems to have fed into agreed prices during February. At this stage, it is difficult to gauge how much of the drop in housing activity is attributable to one-off factors and therefore whether February’s fall in prices is just a temporary blip or the start of a new trend.’

Three monthly house price inflation, a more stable measure than volatile monthly figures, was 1.6% in February, slipping back from 2% in January and its recent peak of 3.7% in September.

Mr Gahbauer said: ‘A pause in the upward trend will also be a relief to potential first-time buyers who are no longer benefiting from the stamp duty holiday and for whom affordability had begun to deteriorate again over the course of 2009.’