House prices fall marginally in February, says Nationwide

House prices fall marginally in February, says Nationwide

	Published : Wed, 01 Mar 2006 13:50 By : Richard Owen Print this Story

LONDON: House prices in Britain have fallen in February -- for the first time in the last eight months -- according to building society Nationwide. The firm said the prices fell 0.2 per cent from January but the fall should be taken into account considering a substantial increase of 1.5 per cent in the prices in January.

On a year-on-year basis, the house prices were 3.7 per cent higher, but down on January's 4.4 per cent. The average house price in the country is now at 158,573 pounds, according to Nationwide.

Nationwide is upbeat in spite of the decline in February as it notes that the trend had been strong during the last six months.

The building society says the Bank of England's Monetary Policy Committee is very unlikely to consider a revision in the interest rates in such circumstances. Greg Fuzesi, Nationwide's senior economist, said the continued rise in the three-month average since October 2005 still shows strength in the market. "This has discouraged the MPC from cutting interest rates in February," he said.

Fuzesi says the coming months will determine whether the February fall had been a pause before a surge in activity in spring or it had been the first sign of weak market fundamentals weighing down on prices.

Fuzesi, however, feels that the pickup in spring, even if it happens, may not be strong as many first-time buyers continue to face unaffordable prices while the confidence in the strength of the economy is yet to be fully established, which may result in delayed purchase decisions.

Nationwide said increasing buy-to-let mortgages have been an important factor in the recent buoyancy of the market. It revealed that in the last six months, the number of buy-to-let mortgages has grown by 11 per cent, a larger increase than the 1.3 per cent rise in the total stock of all outstanding home loans.

Meanwhile, the Confederation of British Industry has come out with data indicating retail sales fell more than expected in February, putting its sales balance at -18 compared with -11 in January. However, shopkeepers feel the decline will slow in March.