Properties remain over-priced and unaffordable for the vast majority of first-time buyers – despite a 10.5% fall in house prices over the last 12 months, the National Housing Federation has warned.

The average house in England has seen £19,000 wiped off its value since August last year, and now costs £164,654, according to new figures released by Nationwide today.

But the sustained growth in house prices over the last decade – which saw values soar by 176% on average in England – means they are still at a historically high level and remain unaffordable to millions of first time buyers.

The Federation’s chief executive, David Orr, said: “It would be a grave mistake to think that because prices are falling property is becoming more affordable as a result.

House prices have soared by over 170% on average over the last decade, and remain at a historically high level – with the average house still costing nine times average incomes.

And far from helping first-time buyers, the credit crunch has made it harder than ever to get a foot on the property ladder as mortgages offers have slumped to an historic low and locked millions out of the market.”

The Federation believes the sharp drop in house-building completions is also threatening to sow the seeds for the next boom, as demand outstrips supply over the next few years to dramatically inflate values once again.

Research commissioned by the NHF earlier this year, predicted house prices in England would begin to recover in 2010 and then rapidly grow over the following three years as these factors come into play – increasing by an average of 25% by 2013.

The Federation insists that despite some calls to the contrary it is critical that the Government continues to invest in new social housing – as those registered as being in need of an affordable home has soared to more than four million people.