The drop was caused by the end of stamp duty relief, the cold weather and more properties being put up for sale. The average home is now worth £166,857.
The Halifax said that prices were still 4.5% higher than a year earlier, but the market had slowed in recent months.
The survey found that prices are also a full 8% higher than the lowest point of the market in April 2009.
The icy weather has been widely noted as a major factor in the latest round of data about the UK housing market.
Weather conditions slowed activity, with many potential homebuyers less tempted to look around homes or finding it difficult to travel.
The end of the temporary stamp duty relief was also regarded as a factor in the slowdown.
Both these issues were cited ast week by the Nationwide building society , which said that prices had fallen by 1% in February.
Mortgage lending also suffered at the start of the year. Recent figures from the Council of Mortgage Lenders also showed that gross lending for home loans fell by 32% in January compared with December, reaching a 10 year low of £9.1bn.
The Bank of England also reported a 17% fall in the number of mortgages approved for house purchase during January.
