Weaker housing market confirmed

Some are predicting a slight fall in house prices in 2008

Annual house price growth in England and Wales continued to fall although prices remained unchanged in February, according to the Land Registry.

House prices in England and Wales in February remained the same as the previous month, with the average property costing �185,616.

But that cut the rate of annual price change to 5.3%, the sixth fall in a row, confirming a weakening market.

London showed its first monthly dip for some time with prices down 0.4%.

Fading market

The annual rate of increase in house prices continued to slow, falling from 6.4% in January and 6.7% in December.

This month's [February's] -0.4% change in London is a more volatile movement than that experienced in the country as a whole Land Registry

Back in August last year, the annual rate of increase was much higher at 9.4%, the Land Registry said.

The typical detached home in England and Wales cost �278,224 in February, some 4.4% more than the same month in 2007.

The average price for a flat or maisonette in February (�174,563) was higher than that of a semi-detached house (�174,406).

Figures also reveal that the high-end market slowed in 2007 with 381 properties in England and Wales sold for more than �1m in December 2007 compared with 542 in December 2006, a 30% fall.

The Land Registry records all property sales in England and Wales and is the only survey to provide an accurate picture of prices down to postcode level.

London's house price boom in recent years was more pronounced than in much of the country, and the annual rate of increase is still the highest at 10.6%.

But in February prices fell, compared to January, by 0.4%. The West Midlands showed the biggest month-on-month rise (up 1.3%), but prices fell the most in Wales (down 1.1%).

Over the last year at a more local level, the highest annual price change was in Reading (up 12.7%) and the biggest fall was in the city of Nottingham (down 2.3%).

State of the market

A range of surveys suggests that the UK housing market has been slowing at a greater rate than at any time since the early 1990s.

Last week the UK's second biggest mortgage lender, the Nationwide, revised its opinion that house prices would be static throughout 2008.

It is now predicting a "modest fall" in prices by the end of the year, after recording its fifth consecutive month of falling prices in March.

It put the annual UK house price inflation rate at 1.1% in March. Rival mortgage lender the Halifax will publish its house price index for March in the coming days.

Despite a slowdown in prices, the mortgage market has put a squeeze on potential buyers.

The cost of new mortgages is rising, as banks are less inclined to lend to each other owing to the credit crunch.

First-time buyers are also being told to come up with a bigger deposit by lenders than in recent years.

Unlike other surveys, the Land Registry figures are calculated from actual sales prices, rather than lenders' data.

A slight time-lag on information means the original January average house price of �186,045 has been revised, resulting in static month-on-month figure, rather than a fall in the average price in February.

HOUSE PRICES ACROSS ENGLAND AND WALES

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