The mortgage industry has blamed the latest signs of a mortgage market slowdown on pre-election "jitters".
Although house price growth has slowed and mortgage activity is down sharply on 12 months ago, brokers and property specialists expect a recovery later this year.
House prices rose just 0.6% in February, according to the Office for National Statistics, a rise of 7.2% over the year.
But that is down from a high of 12.1% a year in September.
In house prices in London actually fell by £9,000 to an average of £490,000.
And new figures from the Council of Mortgage Lenders, also published yesterday, revealed sharp annual falls in the number of mortgages granted in February.
Mortgages for house purchases fell 14% year-on-year, while loans to home movers and first-time buyers fell a hefty 16%.
Danny Waters, chief executive of mortgage distributor Enterprise Finance, said January's mortgage market "malaise" has extended into February. "The jitters may continue until the election, but we may then see a strong second half to the year as the political uncertainty disappears."
David Whittaker, managing director of Mortgages for Business, said the mortgage market is set to be shaken to the foundations by the most uncertain general election in a generation.
"In as little as three weeks we may not have a workable majority of any kind in the House of Commons. Very soon, the emerging probability of an ultra-hung Parliament could throw economic models haywire."
Whittaker said that with consumer prices index at zero for the second month in a row, deflation could come to the housing market's rescue. "We have entered completely uncharted economic. Lower consumer price inflation could actually boost house price growth, as long-term borrowing costs fall and in turn mortgage rates improve even further."
Richard Sexton, business development director at e.surv, said: "While recent months have been a rough patch for mortgage lending, it isn't forever.
"If anything, it's a testament to the stability of today's house purchase mortgage market that we can ride out these pre-election nerves.
"Lenders appear keen that to ensure that the supply of affordable mortgage deals will still be there when demand picks up again."
Mark Harris, chief executive of mortgage broker SPF Private Clients, said there are signs that the mortgage market picked up in March. "Government schemes aimed at helping first-time buyers are proving to be hugely successful, with the Help to Buy Isa announced in the Budget set to raise awareness even further."
The CML figures showed a year-on-year rise in buy-to-let, he said, proving its enduring popularity. "The relaxation of pension rules this month is likely to provide a further boost for the sector. A combination of cheap mortgage rates, easing criteria and poor savings rates are convincing many that investment property is a sensible home for their money."
And Harris anticipates "a flurry of activity" once the election is out of the way. "There will certainly be plenty of cheap mortgage rates to tempt buyers. Lenders have lots of capacity to lend and if lending levels have been subdued at the beginning of the year, they will have plenty of ground to make up."
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