UK house prices fell by 0.5% in February, Halifax says

House for sale signs
Image caption Uncertainties face the outlook for house prices, such as the effect of the eurozone crisis, Halifax said

UK house prices fell by 0.5% in February compared with the previous month, according to the latest survey from the Halifax.

The lender, now part of Lloyds Banking Group, said that the value of the average home in the UK had dropped by 1.9% from a year earlier.

That meant the average home now cost £160,118, the Halifax said.

It said that "significant uncertainties" faced the outlook for house prices during the rest of 2012.

The prospects for property prices depended on events in the eurozone and the potential knock-on effects on the UK, according to Halifax's housing economist Martin Ellis.

Mortgage rate rise

February's fall in property values came after a 0.6% rise in prices during January, the Halifax data shows.

The three-month on three-month measure, seen as a less volatile indication of house prices, showed a 1.1% drop in February.

Mr Ellis said prices were broadly similar to last spring, owing to low interest rates maintaining housing demand and the supply of homes coming onto the market remaining tight.

He added that the falling rate of inflation should relieve some pressure on household finances.

However, the Halifax, which is the UK's biggest mortgage lender, confirmed at the weekend that it is to raise its standard variable mortgage rate (SVR) from 1 May.

It said the rise - from 3.5% to 3.99% - was due to the higher cost of raising funds for mortgages from both savers and the financial markets.

Regional variations

The Halifax is showing a slight divergence from data provided by another major lender - the Nationwide Building Society.

Both use their own mortgage data to calculate the house price data, and the Nationwide said that prices rose on a monthly and annual basis in February, by 0.6% and 0.9% respectively.

However, the year-on-year comparison is calculated slightly differently by the two lenders. The Halifax compares the previous three months with the same three months a year earlier to give a smoother comparison, rather than a direct comparison of the equivalent months as calculated by the Nationwide.

The Nationwide said the price rise would not last through the summer, as a stamp duty levy returns for many first-time buyers, while the Halifax said the outlook for prices was uncertain.

Meanwhile, the latest Land Registry figures show there are significant price change differences in different areas of England and Wales. For example, it said prices rose by 2.8% in London in 2011, but dropped by 7.1% in the north east of England.

Maria Kemp, of estate agent Kemp and Co, said: "The three month decline in prices is a fair reflection of where the property market is at. Prices are by no means collapsing but are still under pressure.

"Many people are still very nervous about the health of the economy, and rightly so. This is tangibly feeding through into prices.

"Many families are struggling to secure the finance to fund a forward move, or simply are not comfortable about committing to a considerable financial transaction at a time of real economic uncertainty."

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