House Prices Stumble in February

House prices fell by 1.0pc in February, according to latest figures from Nationwide.

House prices took a change of direction in February and fell by 1%, according to the latest Nationwide Monthly House Price Index. This decline may be due to the poor weather during February, however the termination of the stamp duty holiday at the start of the year may also have been exerting an effect.

The drop in house prices this month follows nine consecutive months of rising property values, however it is too early to decide if this is the start of a new trend, the Nationwide is saying.

The average price of a typical property sold in the UK during February was £161,320 and this represents a year on year increase of 8.6% when compared to February 2009. New buyer enquiries have dropped significantly since the New Year and the number of new mortgages taken out in January also fell which may indicate a loss of momentum in the housing market as the stamp duty holiday ended and the icy weather conditions deterred house hunters.

Commenting on the figures Martin Gahbauer, Nationwide’s Chief Economist, said:

“Even without the impact of stamp duty changes and the snowy weather, it would have been surprising to see house prices maintain the very strong upward momentum seen for most of 2009. In light of low growth in household incomes and elevated levels of unemployment, house prices were beginning to move ahead of the recovery in general economic conditions.”

“With the longer term stability of the market in mind, it would be a positive development for house prices not to become decoupled from the economic fundamentals. A pause in the upward trend will also be a relief to potential first-time buyers who are no longer benefiting from the stamp duty holiday and for whom affordability had begun to deteriorate again over the course of 2009.