UK property prices dropped in January by the biggest annual amount since 2001, reports Hometrack.

On average, the costs of a home in England and Wales fell 9.4% from the same period a year earlier to £158,300. The monthly fall was 1% and the worst drop was seen in London where prices were down 1.1% from December.

"The market is at the mercy of the economy," Richard Donnell, director of research at Hometrack, said.

“The short-term prospects for the economy and levels of unemployment are at the forefront of most consumers' minds and these will be key to the performance of the housing market over 2009."

The average time a property now takes to be sold is 12.3 weeks - 45% longer than a year earlier. Sellers are now getting less than 90% of asking prices, Hometrack reported. It forecasts further price falls in the UK of 10% this year.

Hometrack collects data from 5,800 estate agents and surveyors in 10 regions in England and .

Robin Bowman