Thrifty Loans

Nationwide – Britain’s biggest building society – has reported a fall in house prices in February, for the fourth month in a row. Average house prices fell by 0.5% in the month, leaving the annual rate of house price inflation down at just 2.7%, well down on January’s figure of 4.2%.

Chief economist at Nationwide, Fionnuala Earley, commented: “Overall it seems clear that we will not see recent rates of growth, in either the UK economy or housing market, repeated for some time.”

The Nationwide annual figure is now not far above the Consumer Prices Index inflation figure which was 2.2% in January, and it is lower that the Retail Prices Index which now stands at 4.1%. In house prices go up less than the rate of inflation, then houses will lose in real value.

According to the Nationwide this is the first time since 2000 that house prices have gone down for four months in a row. Despite the news, average house prices have gone up by £12.75 a day in the last year, and now stand at an average of £179,358.

Ms Earley said: “The trend in prices is clearly weakening, but the size of the drop in the annual rate between January and February perhaps overstates the rate of cooling, as it partly reflects the particularly strong increase in prices in February last year. The three-month on three-month rate of price growth rate fell to minus 1% in February, down from minus 0.4% the previous month.”

Earlier in the week the Land Registry reported that house prices in England and Wales were up by 0.9% in January, and the property analysis website Rightmove said asking prices in the same region had gone up by 3.2% in the four weeks to 6 February. Despite that, the number of unsold houses was also up.

Howard Archer, economist at City research firm Global Insight, said: “House prices are continuing to buckle under the substantial pressure emanating from increased affordability constraints and tighter lending conditions.”