Higher interest rates have continued to hit the housing market as prices fell for the second month in a row during November.

Figures from the housing information group Hometrack show the average cost of a home in England and Wales dropped by 0.2% to stand at £175,700.

The fall, which followed an October drop of 0.1%, helps to further slow the annual rate of house price growth to just 3.6%, the lowest level since July last year and down from 4.4% the previous month.

Hometrack said prices fell across 20% of postcode areas, with half of these falls in southern England.

Hometrack is the most recent group reporting monthly house price falls after property website Rightmove said the average cost of a home fell by 0.7% in the four weeks to November 10.

Halifax said house prices fell by 0.5% in October and echoed Hometrack's claim that it was the second month in a row prices fell.

The Royal Institution of Chartered Surveyors said house prices were falling at their fastest rate for two years during October.

Richard Donnell, Hometrack's director of research, said new buyer registrations were down by 26% over the last five months.

He said: "Continuing media focus on the fall-out from the credit squeeze, along with relatively high interest rates is resulting in widespread caution among homeowners, the majority of whom do not need to move and who are sitting back until the outlook becomes clearer."

He added: "While the economic fundamentals remain strong it is hard to see the catalyst for any short-term turnaround in market confidence other than interest rate cuts early in the New Year."

On a regional basis house prices fell in all areas of England and Wales except the North where they remained static.

Price falls were greatest in the East Midlands, where the average cost of a home dropped by 0.3% during the month.

The amount of time a home is on the market increased during November to an average of eight weeks, leading sellers to accept bigger discounts on asking prices, with people now getting 93.8% of their original price, the lowest for nearly two years.

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