Latest figures from Hometrack have revealed that Uk house prices have fallen for the first time in two years.

Property prices have fallen by 0.9%, year on year, which represent the worst figures since January 2006 where prices fell by 1%. The research by Hometrack showed that prices have now been dropping for seven consecutive months with an average monthly fall of 0.6%.

Many in the industry have put the stagnating market down to lenders tightening criteria and withdrawing mortgage products. Whilst this has certainly had an effect,
Director of research at Hometrack, Richard Donnell, believes that : "While the availability of finance is impacting on demand in certain segments, the reality is that weak confidence is effectively resulting in a buyers strike with households sitting on the sidelines and waiting to see how events unfold.

"As we predicted last year, transaction volumes will be the big casualty and there now seems the prospect of a record low in residential sales volumes in 2008."

Donnell waxed pessimistic about the outlook for 2008, "The current downward pressure on prices will only start to be reversed once there is a turnaround in buyer confidence, the timing of which, is almost impossible to predict but will revolve around greater stability in the financial markets and an improved economic outlook."

Moneyweek speculated this week that buyers will only return to the market when the cost of renting begins to catch up with the relative cost of buying. Indeed, with rental yields at around 5%, it certainly seems like renting is a good choice at the moment.