House-price fall fuels speculationrecovery is running out of steam

HOUSE prices fell for the first time in 10 months during February as the market was hit by winter weather and the end of the stamp duty holiday, figures show.

The one per cent slide reported by Nationwide did not come as a surprise, as other indexes had pointed to a drop in activity during the early part of the year.

But the fall, which ended nine consecutive months of price rises, fuelled speculation that the housing market recovery is running out of steam, with many economists expecting house prices to resume their downward trend this year.

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Martin Gahbauer, Nationwide’s chief economist, said: “There is evidence from a range of indicators that the market may have lost momentum in early 2010 as the stamp duty holiday ended and house hunters were obstructed by the icy weather.

“This drop in demand seems to have fed into agreed prices during February.

“At this stage, it is difficult to gauge how much of the drop in housing activity is attributable to one-off factors and therefore whether February’s fall in prices is just a temporary blip or the start of a new trend.”

The Land Registry also released figures yesterday showing that the housing market remained robust during January, with prices in England and Wales rising for the eighth consecutive month, increasing by 2.1 per cent.

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The gain pushed the average cost of a home up to 165,088, the highest level since September 2008, while annual house-price growth rose to 5.2 per cent, the second consecutive month during which it has been positive.

However, the Land Registry index, which is based on property completions, tends to lag behind other house price measures by around three months.

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