According to data from LSL, house prices in the nation have fallen by an this fall is in contrast with much of England and Scotland, which have seen increases in house prices on the back of better mortgage availability.

Richard Sexton, director of e.surv chartered surveyors, blamed a continuing squeeze on personal finances and high unemployment for the slump.

“Despite growing optimism regarding the market across the border, the Welsh housing market is still caught in the grip of the credit crunch.

“The mortgage market is thawing in England and parts of Scotland but the multiplier effect hasn’t spread to Wales. The Welsh economy is lagging behind the rest of the UK. It is more exposed to public sector cuts, and fewer jobs are being created than in other areas of the UK.”

House prices were up in some regions of Wales, including the Powys and Gwynedd areas which saw growth of 4.3% and 3.2% respectively.

Sexton said that a two-tier market was developing in parts of the country.

“There is a two-tier market, with an unhealthy reliance on wealthier borrowers,” he said.

“These older buyers are in a stronger position to benefit from the record low mortgage rates, as they have been able to bank on the equity from their homes to obtain cheap deals.

“Affordable rates are of little comfort for first-time buyers who can’t put down the big deposits required by banks and building societies. And this is continuing to quash activity and push down prices.”

Sexton added that both Stamp Duty reforms and the launch of Help to Buy Cymru equity loan scheme planned by the Welsh government should open up the market for new buyers in the coming months.