House sales rise in February

House prices rose unexpectedly in February after a small fall at the start of the year, according to figures from the Nationwide.

Prices climbed by a seasonally adjusted 0.3 per cent month-on-month, defying economists' forecasts for a fall of 0.3 per cent following January's 0.1 per cent drop.

The annual rate of house price inflation slipped by 0.1 per cent in February, much less than the revised 1.4 percent drop seen in January. That took the average house price to £161,183.

"The overall picture is one of a market treading water," said Robert Gardner, Nationwide's chief economist. "Given that the recovery hit a soft patch at the turn of the year and looks set to remain sluggish in the year ahead, the property market is likely to follow suit."

Doubts about the strength of the economic recovery after a shock contraction at the end of last year are likely to deter some buyers in the coming months and keep transaction levels low, he added.

However, the market will gain some support from low interest rates and a lack of supply, Nationwide said.

"Sellers remain reluctant to accept lower prices to secure a sale," Gardner said. "There are tentative signs that the volume of homes coming onto the market is slowing."

Most economists expect house prices to fall gradually through the rest of the year as public spending cuts, tax rises and tight mortgage lending deter new buyers