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House prices recover from February dip

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by Gill Montia

UK house prices rose by 0.7% in March, compared with a month earlier, according to Nationwide.

The increase almost reverses the 0.8% month-on-month fall recorded in February and takes the average cost of a home to £164,519, or 9% more than a year ago.

However, the three-month-on-three-month rate of inflation edged down to 1.6% in March, from 1.8% in February.

The lender’s chief economist, Martin Gahbauer, observes: “The last two months are consistent with a relatively flat profile for house prices, and in line with the recent drops seen in buyer enquiries and house sales.”

Mr Gahbauer goes on to point out that new mortgage approvals have failed to recover from their January dip, indicating that the weakness in house sales seen at the start of the year may have been due to more than bad weather.

(New figures from the Bank of England show the number of loans sanctioned for house purchases falling by over 1,000 in February, compared to a month earlier, to 47,094.)

Looking to the future, the economist suggests that prices will remain fairly stable as long as there is no appreciable rise in the number of properties for sale.

Finally, with regard to the first-time buyer stamp duty holiday for properties costing up to £250,000 announced in last week’s Budget, Mr Gahbauer is not expecting the measure to propel the market to full recovery.

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News posted: March 30, 2010

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