House prices in Oxford increased by more than £100 a day and were among the fastest-earning homes in the country last year.

Figures released by Nationwide, Britain's biggest building society, showed house prices in the city rose by 13 per cent.

The average-priced house in Oxford now costs £339,404 with the city ranked fourth in a survey of areas with the biggest percentage rise after Belfast, Aberdeen and London - and just beating Reading and St Albans.

However, in the last three months of 2007 house prices across Oxfordshire fell more than anywhere else in the country.

The average house price in the UK fell by 0.3 per cent - but in Oxfordshire values tumbled by five times as much - 1.5 per cent.

Chris Dixie, sales negotiator at Oxford-based estate agents Cluttons, said: "We have found people who have wanted to move have had to be prepared to deal on price in a way perhaps they haven't had to do before.

"We have not been seeing the amazing prices we were seeing in spring and summer.

"There is still a significant demand for decent sized family homes in North and East Oxford, but there have been more flats coming on to the market meaning prices may have dropped.

"I don't think we have seen a uniform reduction, but certain things have been a lot trickier to sell."

He said it was common for estate agents to be quiet in the run-up to Christmas - but said December had been busier than October and November.

Mr Dixie added: "People are looking at everything, they are reading about the property market and they are just being a bit more cautious. It's just a cooling off period.

"I think this year, we'll just see a levelling out and I still think Oxfordshire is a fantastic place to buy."

Mr Dixie said he did not believe in predictions that house prices could drop by as much as 10 per cent this year.

He added: "We have certainly agreed sales under the asking price but not hugely significant ones - £5,000 or £10,000 rather than £20,000 or £30,000."

Hometrack director of research Richard Donnell said: "The second half of the year had seen a major reversal in confidence on the back of higher interest rates and concerns over the financial markets.

"High transaction costs, a weak outlook for prices and continued uncertainty among vendors creates the potential for a major lack of housing coming to the market."