House prices fell by 0.8 per cent this month, according to a recent study by a leading building society.

As such, this lowers annual house price growth down to 6.9 per cent, reports Nationwide.

Chief economist at the firm Fionnuala Earley explains that this is consistent with the prediction of house price growth of five to seven per cent in 2007.

The cost of a typical house in the UK now stands at £184,099 - nearly £12,000 more than at this point in 2006.

"Looking forward, it is clear that there are uncertainties in the market, not least from the continuing turmoil in the UK's financial markets and the overall impact that this may have on the future performance of the UK economy," Ms Earley adds.

She concludes that Nationwide expects economic conditions to be more difficult for the housing market in 2008, but does not forecast a recession.

In related news, the National Association of Estate Agents reported that "continued uncertainty" in the economic environment suggested a slowdown in the housing market last month.