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Snow and stamp duty send house prices down 1.5% 4 March 2010
Francesca Steele (about the author)

House prices fell by 1.5 per cent in February, the first decline since June 2009, following seven consecutive monthly increases.

Halifax, Britain’s largest mortgage provider, said that the cold weather at the start of the year, together with the end of the stamp duty holiday on properties prices between £125,000 and £175,000, also had an adverse impact on housing demand.

Martin Ellis, an economist for Halifax, said that an increase in the number of properties available for sale, as recent improvements in market conditions encouraged more homeowners to attempt to sell their property, had helped to reduce an imbalance between supply and demand.

The average house price in the UK is now £166,587.

Prices over the year still higher

However, house prices in February were still 4.5 per cent higher on an annual basis – the largest increase in the annual rate of change, which is measured by the average for the latest three months against the same period a year earlier. This reflects the extremely low base for comparison this time last year.

Last week, Nationwide, the UK’s biggest building society, said that prices had slumped 1 per cent in February, but that this could be a “positive development” that prevented the housing market from racing ahead of the general economy.

Howard Archer, of IHS Global Insight, said the revival in house prices in recent months had been a consequence of sharply reduced mortgage interest rates and more affordable prices, as well as a shortage of properties for sale.

He said: “The fall in house prices in February reported both by the Halifax and the Nationwide is supportive to our long-held view that house prices will be prone to corrections in 2010 and will probably be no better than flat over the year.

“Although the Bank of England may well hold off from raising interest rates until 2011, the overall economic environment is still far from supportive for house prices while credit conditions remain pretty tight.”

The Bank of England is expected to hold interest rates at their historic low of 0.5 per cent in an announcement later today.

Source: Times Online