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London house prices are falling faster than at any time since the slump triggered by the collapse of Lehman Brothers in 2008, according to latest official figures.

The average cost of a home in the capital slipped £9,000 to £490,000 in February, the lowest level in almost two years. It was the sixth monthly fall since prices peaked at £514,000 in August, today’s data from the Office for National Statistics reveals.

The latest evidence of a reverse came as Britain entered a period of price deflation — but only on a statistical technicality, with shop prices falling 0.01 per cent in the year to March.

The official headline rate of the Consumer Prices Index, which is calculated to one decimal point, remained at zero for the second month running.

Supermarket price wars continued to keep a lid on inflation, although groceries fell at a slower rate than in February, and the cost of clothes and shoes on the high street also dipped.

A five per cent cut in gas bills from the country’s biggest supplier British Gas also kept the cost of living down, but this was offset by a bounce in petrol prices following a slight recovery in the oil market.

Chancellor George Osborne said: “Today our plan for working people gets another boost, with good news for family budgets. For the second month in a row, inflation is at zero.”

But Labour’s shadow Treasury Chief Secretary Chris Leslie, responded: “A few months of falling world oil prices won’t solve the deep-seated problems in our economy or make up for years of bills rising faster than wages.”

Property experts said the abrupt about-turn in the London housing market was a boost for first-time buyers.

The prices have been depressed by tougher mortgage requirements — making it harder for buyers to secure home loans — a stronger pound compared with the euro, which has made London more expensive for European buyers, and uncertainty ahead of the general election with some foreign investors deterred by the threat of Labour’s mansion tax.

Stephen Smith, director of Legal & General mortgage club and housing, said: “House price growth has slowed since the end of 2014. Although it might not seem like it, this is actually good news for the housing market, as price rises that are too sharp can prevent people from getting on the property ladder.”

Prices in the capital are still up 9.4 per cent year-on-year but this marks a dramatic slowdown since the annual rate peaked at 20.1 per cent in May last year. If the pattern of monthly declines continues then London will be in negative year-on-year territory within months for the first time since prices started to recover in the spring of 2009 when the Bank of England slashed its interest rate to an emergency level of 0.5 per cent.