The cost of a home fell by a further 1.8% during the month to leave the average property costing £174,178 - 12.7% less than in August last year.

Halifax said the latest fall meant house prices had returned to a level last seen in February 2006.

The average house price is also now below the Government's new stamp duty threshold of £175,000 according to both the Halifax and Nationwide indexes.

Annual house price inflation, which measures the average cost of a home during the previous three months compared with the same period a year earlier, dropped to 10.9%, a new record low for the index and the first time this measure has hit double digits.

The figures are in line with those reported by Nationwide Building Society last week, which showed that prices fell by 1.9%  during August, contributing to annual falls of 10.5%.