House prices dip 1% in February

In the first of the UK house price indices for February, Nationwide has reported a 1% drop in the average value of a home, compared to a month earlier.

The decline ends nine consecutive monthly rises and the building society points out that bad weather and the end of the stamp duty holiday in January will have played their part.

Using a quarter-on-quarter comparison, UK house prices showed a 1.6% increase in the three months to February, down from 2% in January but ending the month 9.2% up on a year ago, at an average £161,320.

Nationwide has reserved judgment on whether this month’s fall is a blip or the beginning of a new trend.

The lender’s chief economist, Martin Gahbauer, comments: “There is evidence from a range of indicators that the market may have lost momentum in early 2010 as the stamp duty holiday ended and house hunters were obstructed by the icy weather.”

He adds: “Even without the impact of stamp duty changes and the snowy weather, it would have been surprising to see house prices maintain the very strong upward momentum seen for most of 2009.”

Bearing in mind the economic fundamentals that underpin the UK’s housing market and its longer-term stability, Mr Gahbauer regards February’s dip as a “positive development”.

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