House prices fall in February
Property prices fell by 0.5% in February bringing house price inflation to its lowest level since November 2005.
The Nationwide house price index shows property prices fell in February for the fourth consecutive month. The average price of a house in the UK is now £179,358 - down from £180,473 in 2007, according to the building society.
Fionnuala Earley, chief economist at Nationwide, 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.”
Despite believing that a recession in the UK is “unlikely”, Earley warns that home owners are unlikely to see the recent rise in property values repeated anytime soon.
But she added: “There is currently an unprecedented amount of uncertainty about future economic conditions, but if the Bank of England’s central projection that the economy continues to grow is correct, conditions for the UK housing market are perhaps less gloomy than some would have us believe.”
The figures from Nationwide, the fifth largest mortgage lender in the UK last year, contrast with those from the Land Registry which show house prices increased in January - albeit by just 0.9%.
The Land Registry reports that all regions in England saw prices increase in January from the previous month, with properties in the North West seeing the largest rise of 2%.
However, properties in Wales fell in price by 0.3% bringing the average house price to £140,289 (see tables below).
Its figures also show that prices in England and Wales were up on an annual basis by 6.4%. However, the growth of annual house price inflation fell slightly in January, from 6.7% the previous month.
Nationwide house price index August 2007 to February 2008:
|Monthly change||Annual change||Average price|
|Source: Nationwide 29/02/08|
Land Registry house price index January 2008 by region:
|Region||Monthly change||Annual change||Average price|
|Yorkshire & The Humber||0.9%||4.3%||£147,201|
|Source: Land Registry 28/02/08|
Land Registry house prices January 2008 by property type:
|January 2007||January 2008||Difference|
|Source: Land Registry 28/02/08|
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.