House prices and mortgage approvals drop in January

HOUSE prices and mortgage approvals both fell in the first month of 2011 sparking fears of a sluggish year for the property market, according to closely watched data published yesterday.

Mortgage lender Nationwide, the first to publish figures for January, indicated that house prices declined by a seasonally adjusted 0.1 per cent last month after December’s 0.4 per cent rise. Prices were 1.1 per cent lower last month compared to January last year, producing an average house price of £161,602. This is £1,161 lower than December’s average and takes house prices back to below their September 2009 level. “The property market entered 2011 with a whimper rather than a bang,” said Nationwide chief economist Robert Gardner. He added that the outlook remained “highly uncertain”.

But, its data suggested that the pace of decline appeared to be stabilising as the three-month decline in prices, which smoothes out monthly price volatility, eased to 0.5 per cent in January from one per cent in December.

Meanwhile, the Bank of England said the number of mortgages approved for house purchases showed a sudden dip in December to their lowest level since March 2009. There were 42,563 approvals, showing a relatively sudden dip of nearly 5,000 from the previous month. Analysts said that December’s drop may have been exacerbated by harsh weather.