Data from British bank Halifax showed they fell 2.9 percent month-by-month in January to £223,691, compared to a 2.5 percent rise in December to £230,430.
Despite this, house prices were up 0.8 percent in the three months to January compared to the same period a year ago.
But they remained largely unchanged over the course of the past 12 months, falling by just 0.8 percent from the price of £224,025 in January 2018.
Halifax managing director Russell Galley said price growth is expected “to remain subdued in the near-term”.
He warned the next year will be “important” for the housing market as the market braces itself for any potential impact from Brexit.
Mr Galley said: "Attention will no doubt be drawn towards the monthly fall of 2.9 percent from December to January, the second time in three years that we have seen a drop as a new year starts.
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House prices fell in January as the market waits for impacts from Brexit (Image: GETTY)
There's no doubt that the next year will be important for the housing market with much of the immediate focus on what impact Brexit may have
Russell Galley
"However, the bigger picture is actually that house prices have seen next to no movement over the last year, with annual growth of just 0.8 percent.
"This could either be viewed as a story of resilience, as prices have held up well in the face of significant economic uncertainty, or as a continuation of the slow growth we've witnessed over recent years.
"There's no doubt
