The average mix-adjusted house price was £211,815 in September, not seasonally adjusted.
And average house prices were 0.7% lower over the quarter to September 2010 compared to a quarterly increase of 1.6% in June, seasonally adjusted.
Average prices increased by 6.5% over the year in England , by 1.4% in Scotland and 8.8% in Wales but fell by 7.6% in Northern Ireland.
Prices paid by first time buyers were 4.6% higher on average than a year earlier whilst prices paid by former owner occupiers increased by 6.7%.
Prices paid for new properties were 5.6% higher on average than a year earlier whilst prices for pre-owned dwellings increased by 6.2%.
Paul Diggle, property economist at Capital Economics, says: “The second fall in the government’s measure of house prices in almost a year and a half suggests that the recent weakness picked up by the more timely indices is finally showing through in house prices at the completion stage.
“With the economic recovery set to slow considerably and unemployment rise as public sector job losses hit home, we believe that the recent weakness in house prices is here to stay.”