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HOUSE PRICES RISE 0.3%IN FEBRUARY 2011

 
The recent fall in house prices may be slowing down, according to figures from the Nationwide building society.

It said prices had risen slightly in February, by 0.3%, to leave them 0.1% lower than they were a year ago.

It means the average UK house price is now £161,183, the lender said.

The building society described the state of the property market as "treading water" with seasonally adjusted prices more or less flat over the past six months.

"This shouldn't come as too much of a surprise," said the Nationwide's chief economist Robert Gardner.

"Housing market trends are closely linked to wider economic prospects.

"Demand for homes has levelled out, supported by historically low interest rates and some stabilisation in the labour market," he added.

Reluctant sellers

Some economists and commentators have predicted quite a sharp fall in prices this year, possibly by more than 10%.

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There are tentative signs that the volume of homes coming onto the market is slowing”
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Robert Gardner

Nationwide chief economist
Mr Gardner took a different view, predicting a continued low level of sales, with prices flat or only "modestly" lower by the end of 2011.

The continued rationing of mortgage funds by lenders is expected to restrict the number of potential buyers and should, in theory, help to undermine prices.

Mr Gardner calculated that someone earning the average salary, and saving 15% of their take-home income, would now take eight years to save enough for the typical 21% deposit on the average house.

But he said that other factors were keeping the number of sellers low.

"Sellers remain reluctant to accept lower prices to secure a sale," Mr Gardner said.

"In fact there are tentative signs that the volume of homes coming onto the market is slowing," he added.

Howard Archer of IHS Global Insight said: "The very real likelihood that the Bank of England will start raising interest rates sooner rather than later can only add to the pressure on housing market activity and prices."
 

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