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House prices fell by 2.5% in October, raising the year-on-year rate of decline to 7.4%, according to the government's communities department.
The figures put the average price of a home in the UK at £203,539 - a fall of more than £12,000 in the six months from May.
The continued dearth of first-time buyers, resulting from a lack of mortgages available at high loan-to-values, pushed down the prices of smaller properties.
The biggest decreases were in flat prices, which were down 3.3% over the month, while the average price paid by first-time buyers across the board was 9.7% lower than in October last year.
Meanwhile, separate figures from the Council of Mortgage Lenders (CML) showed mortgage lending to homebuyers remained at less than half of last year's level in October, despite the 0.5% cut in interest rates at the start of the month.
The CML said 39,900 mortgages had been approved for house purchases during the month, a 14% jump on September's figure but 52% down on October 2007.
The value of loans for purchases also bounced back in October, from £5bn to £5.5bn. However, this remains 57% lower than the same month last year. The rise in lending was split between first-time buyers and homemovers. The number of loans to first-timers increased 15% to 15,400, while homemover loans were up 14% to 24,500.
However first-time buyers, who are the lifeblood of the housing market, allowing homeowners to sell up and move on, are still thin on the ground by historical standards. Last year, first-time buyer approvals were running at around 30,000 a month - double the latest figures - and even that was markedly below the 54,100 recorded in July 2002.
The CML said that while approvals had increased and gross lending was also up - at £18.6bn it was 6% higher than in September - government policy meant banks and building societies would continue to restrict lending.
The CML director general, Michael Coogan, said current policy objectives were "conflicting and incoherent", with lenders expected to build up their capital, repay the taxpayer bail-out, help borrowers in arrears and provide competitive interest rates to both savers and borrowers.
"We believe the government urgently needs to review the cumulative effect of the approach it has taken in the recapitalisation process on large lenders' willingness and capacity to lend," he said.
"Ultimately, the response of each lender - whether on commitments to follow base rate moves or to finance new business in the future - will depend on its access to, and the price of, its funding."
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