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House prices ease in February

Wed, 01 Mar 2006
According to the UK’s mutual lender, Nationwide Building Society, house prices fell by 0.2 per cent last month.

This dip follows a large increase in January when house prices were up 1.5 per cent, which was the largest rise in more than a year and a half.

However, the trend over the last six months still strong, making interest rate cuts less likely in the short term. Nationwide also warns that, while traditionally buyers return back into the market in the spring, weak economic factors means that this appears less likely this year.

Despite February's fall, housing market analysts are still positive about the coming months.

Commenting on the figures Greg Fuzesi, Nationwide's senior economist, said, "House prices fell by 0.2% in February following a strong 1.5% increase in January. The average house price in the UK is now GBP158, 578, 3.7 per cent higher than at this time last year. The continued rise of our three-month average since October 2005 still shows strength in the market and, significantly, this discouraged the Bank of England's Monetary Policy Committee from cutting interest rates in February."

Mr Fuzesi said, "As we enter the all-important house buying season in March, the prospects for both house prices and interest rate policy will become clearer. It will also show whether February's fall is just a pause before the spring rush or the first sign of weak market fundamentals weighing down on prices. We expect the weaker economic factors to begin to dominate over the next two to three months and to prevent strong house price rises in 2006."
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