In its latest House Price Index, it revealed that house prices are 1.4% lower than a year ago and declined 0.4% in September, after recording a 1.1% rise in August.

The price of a typical home is £163,964.

Nationwide said that policy measures such as the Bank of England’s Funding for Lending Scheme should provide support for activity in the housing market by ensuring the availability of credit and lowering its cost.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said:

“It may be too early to gauge the success of the Funding for Lending scheme but we need it to be successful if the housing market is going to get a much-needed kick-start.

“There is already much debate however as to whether it will help those borrowers who really need assistance. We need cheaper mortgages at higher loan-to-values. Will we get them? Only time will tell.”

More business activity and the London 2012 Olympics have helped to put some energy in the UK economy, the building society said.

However, its chief economist Robert Gardner said that there were “grounds for caution” about jobs, which were a key factor affecting movements in property prices.

“We expect the UK economy to see a gradual recovery over the next twelve months, with house prices remaining relatively flat or declining only modestly over the same period.”