Half of the district's 180,000 houses have fallen in value, according to shock statistics prepared by Bradford Council.

The slump is in stark contrast to the buoyant national picture - and it was revealed today that some people had discovered their homes were worth less than they originally paid.

That in turn has led to misery for private tenants because landlords are reluctant to carry out repairs on homes where values are shrinking.

Now the Council has categorised just over one in five privately rented homes as "unfit" because of problems such as damp, poor facilities and the need for repairs.

The Council says grants for private homes are limited and it is in talks with other West Yorkshire local authorities and housing organisations about low property values and resulting problems.

However, house prices are going up in areas such as Baildon and Bingley. In Ilkley they average £174,756 and are the highest in Yorkshire.

It is in other areas - including the inner city - that values are bucking the national average of a 21 per cent increase in the past year.

The figures have been given to the Audit Commission by the Council in a self-assessment it is required to give as part of its first wide ranging inspection of management.

The report to the Commission says: "Whilst housing is classed as affordable the legacy of housing types, condition, location and occupancy pose significant challenges in creating decent housing and neighbourhoods."

It shows 55 per cent of the district's properties are dropping in value, and 21 per cent of private houses and seven per cent of Council properties are unfit.

But estate agents challenged the figures and said property sales were improving in inner city areas since the riots and were buoyant in the other areas.

Andrew Hodgson, director of Dacre, Son & Hartley's Aire Valley offices, said prices had risen by about 16 per cent. "I can't see that 55 per cent are falling in value," he added.

Diane Longley, sales negotiator for Paul S Withey, said prices were rising by 15 and 20 per cent in some areas and, while they met their clients' wishes, they also priced realistically.

She added: "We had a case of negative equity last week and there have been others but not many. Lower values are more often associated with ex-Council houses because in some cases there is a stigma attached to them. What some people don't realise is that they can be better value than a back-to-back property."

But she warned that people who paid unrealistic prices for properties now could find they were worth less than they paid by next year.

The Council's director of housing, Geraldine Howley, said that early next year council houses would be transferred from Council ownership to community trusts, which would invest £170 million into them over the next five years to bring them up to acceptable standards.

But she said the authority had serious concerns about low property values and the effect on the state of repair of private properties.

The Council was meeting Government officials to discuss innovative ways of channelling funds into private properties.