THE average price of a new-build home in the UK fell by 3.1 per cent last month to £261,645.

Prices are now 3.1 per cent lower than they were at this time last year - the first negative annual rate of change since the housing boom began, a report by website SmartNewHomes found.

The report's authors said the fall was caused by consistent interest rate rises and market speculation, leading to a more cautious attitude among homebuyers, which in turn led to housebuilders adjusting their selling prices.

The North-South divide in the UK housing market became wider last month, as prices fell in all northern regions, with only the North-West showing a marginal rise in prices.

In contrast, prices in London, the South-East and East Anglia rose, after several months of stabilisation, leading analysts to predict the slowdown in the market would not be prolonged.

However, figures from the Government showed a 0.1 per cent fall in average house prices in September, compared with a 0.3 per cent fall for the same period last year.

While annual house price inflation for the whole of England remained unchanged, it rose in the North-East, North-West, East Midlands, London and the South-West.

All other regions saw a fall, with the highest rates remaining in the North-East at 31.2 per cent and Yorkshire at 23.8 per cent.