HOUSE prices fell by 1.1 per cent during November to take the average cost of a property back below the £160,000 threshold, Government figures showed.

The fall contributed to a drop in annual house price inflation, with prices rising by 9.7 per cent during the previous 12 months, compared with an increase of 12.1 per cent in the year to the end of October.

The Office of the Deputy Prime Minister (ODPM) said the average property in the UK cost £159,480 at the end of November.

The ODPM said the fall was caused by a combination of the market slowing down in the run-up to Christmas and some price falls in the South.

A spokeswoman said: "Prices in November fell slightly compared with October, partly due to seasonal factors as the series is not seasonally adjusted, and also partly due to falls in prices in the southern regions."

The North-East continued to dominate house price rises, registering 19.6 per cent average increases compared with 5.2 per cent in London.

The highest prices were still in London, where they averaged £241,385.

David Bitner, head of product operations at The MarketPlace, at Bradford and Bingley, said: "I do not think a slowdown as we normally experience in November and December is any great concern for the property market in 2004."