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Fall in house prices cancels out January rise

Fall in house prices cancels out January rise

Category: Mortgages

Updated: 04/03/2011
First Published: 04/03/2011

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A fall in house prices last month has cancelled out the gains seen in January, with values also down on a quarterly and annual basis.

House prices fell by 0.9% in February, offsetting the 0.8% increase recorded in January, figures from Halifax show.

It means that the average price at the end of the month was £162,657.

The latest fall means that house prices in the three months to February were 0.4% lower than in the previous three months, showing a continuing slight decline in prices, although the fall remains far less serious than the quarterly dips of 5%-6% in 2008.

However, year-on-year prices have fallen by 2.8%, the biggest annual decline registered since October 2009.

Any large scale falls could be prevented by the drop in new properties coming onto the market.

The latest figures from the Royal Institution of Chartered Surveyors showed a reduction in new seller instructions for the fourth month in succession in January.

"Fewer properties have been coming onto the market in recent months," said Martin Ellis, housing economist.

"This trend, if sustained, should improve the balance between demand and supply and help to prevent a more significant fall in house prices."

House sales also remain low. The number of mortgages approved to finance house purchases – a leading indicator of completed house sales – increased by 7% between December and January on a seasonally adjusted basis, according to Bank of England industry-wide figures.

Despite this increase, approvals remain historically low with the total number in the three months to January being 4% lower than in the preceding three months.

"Overall, we expect a modest 2% decrease in house prices in 2011," said Mr Ellis.

"Uncertainty over the economic outlook is likely to weigh down on housing demand this year."

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