House prices have fallen for the first time in 10 months due to the bad winter and the end of the stamp duty holiday.
The Nationwide warned that the “mini-boom” could be over as house prices fell for the first time in 10 months.
The average price dropped by 1% in February, this is the first fall in house prices since April 2009.
The figures produced by the Nationwide, Britain’s biggest building society, will fuel widespread concern that house prices are set to plunge. Martin Gahbauer, Nationwide’s Chief Economist, said ‘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.’ He went on to comment that with the average price of housing rising by £14,000 since last Spring, the recent performance of the housing market is ‘out of kilter’ with the economic downturn. He stated that he expects prices will be flat this year but according to the consultancy, Capital Economics, there will be a far sharper fall of up to 10%.
The ‘mini-boom’, which has seen prices rise for the last nine months in succession, has been fuelled mainly by a boom in the South but more of a slump in the North.
This was confirmed by recent figures published by the Land Registry which shows a gulf between North and South where over the past year prices have risen by up to 10.5% in London and were down by 3.4% in the North East.
According to Richard Donnell, director of research at the property information firm, Hometrack, latest figures show that prices have been rising in only 7% of postcodes and these are mainly confined to Greater London, the South East and the South West. Prices have remained static in all other areas.
In London average house prices are just 5% below their peak of January 2008 at £336,212.
The average price of a home according to the Nationwide’s figures is £161,320.
01 March 2010