Money News
House prices fell by 0.5% in February, according to Nationwide building society, that compiles of one of the UK's leading house price indices. The price of an average property now stands at £179,538 compared to £180,473 in January. This is the fourth consecutive monthly fall in prices, taking the annual rate of house price inflation from 4.2% down to 2.7% - its lowest since November 2005.
But it's not all doom and gloom, according to chief economist at Nationwide, Fionnuala Earley. She says: "The trend in prices is clearly weakening but the size of the drop in the annual rate between January and February perhaps overstates the rate of cooling as it partly reflects the particularly strong increase in prices in February last year."
Land Registry figures are still reporting rises for February to the tune of 0.9%. However, these figures are based on completion of sale rather than Nationwide's approach of recording property valuations at the point at which a mortgage offer is made. This means the index may not reflect true property values as it has to 'catch up' with a slowing market.
However, even though the outlook for house prices is uncertain - with reduced demand and poor affordability due to tighter credit conditions - Ms Earley maintains that a recession is, "still a remote risk for the UK economy". She says that this provides some support for the overall future health of the housing market.
29 February 2008 © Moneyextra.com
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