Fresh evidence that house prices have begun to stabilise came as official figures showed a modest 0.2 per cent decline in May, bringing the average price to £152,497.

The latest data from the Land Registry, which lags behind other indices, showed that total falls over the past 12 months slowed to 15.9 per cent, from 16.2 per cent in April and a peak of 16.5 per cent in February.

They follow separate May figures from lenders Halifax and Nationwide that showed house prices began to rise in the same month, recording rises of 2.6 per cent and 1.2 per cent respectively.

The Land Registry figures support the view that the market is starting to climb out of the slump, although transaction levels remained low, at 31,091 each month between December 2008 and March 2009 and less than half the average monthly 64,674 recorded in the same period a year earlier.

Economists said that a greater number of buyer inquiries and signs of a rise in mortgage approvals could mean completed sales will begin to rise but that this improvement would continue to be hampered by a lack of mortgage finance.

Nicholas Leeming, director of propertyfinder.com, said: "There are still major obstacles to overcome on the path to a full recovery, and lenders seem determined to throw a spanner in the works by ramping up mortgage rates, but the market is picking itself up and dusting itself off."

The Land Registry found the price of the average home in London dropped by 16.1 per cent in May. Detached homes have suffered a smaller drop of 14.5 per cent in the year, thanks to higher demand for family homes and a relative stock shortage. The biggest falls were on flats and maisonettes, which have dipped by 17.3 per cent in the past 12 months.

The North East has suffered the most significant regional annual decline, at 17.2 per cent, bringing down the average house price in the area to £105,567. House prices in Wales improved most last month, rising by 1.2 per cent and bringing annual falls to 13.7 per cent.

Peter Rollings, managing director of Marsh & Parson, the estate agent, said: "We are still bouncing along the bottom. We aren’t going to see any big improvements this year and these small changes — up or down — will continue for another six months. Currently, we are looking at some recovery in prices around next spring. Until then, we’ll continue to see small movements in average prices, although they may begin to start creeping up towards the end of the year.”

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