Asking prices in the UK residential housing market have fallen to their lowest level since December 2005, online estate agent Rightmove says.

Its monthly house price index sees a 0.8 per cent slip in asking house prices in January, following the 3.2 per cent decline seen in December.

This means asking price growth in the last 12 months has slipped from 4.8 per cent to 3.4 per cent.

Despite the fall Rightmove says there are signs for optimism, however.

It argues the mandatory introduction of home information packs (Hips) in the run-up to Christmas saw a rush of smaller properties coming on to the market, driving its index downwards.

Commercial director Miles Shipside also believes many buyers are beginning to find "bargains" they think are relatively good value as a result of recent small falls.

"Some properties have had their prices dropped by ten per cent or more and are now within reach, satisfying some of the pent-up demand from previously disenfranchised buyers," he said.

Rightmove continues to believe interest rate cuts are vital to the market\’s recovery, however. With a reduction expected next month Mr Shipside suggests now could be a good time for buyers.

He added: "Some sellers will no doubt be tempted to test the market at a higher price with the onset of spring, so now is a good time for bargain-hunters to press those committed winter sellers for a deal."

The average property asking price in the UK is now £230,428, Rightmove states.