UK housing recovery running out of steam

THERE were yet further concerns yesterday over a double-dip downturn in the UK housing market when mortgage lender Halifax reported that house prices fell 1.5 per cent in February, the first decline in this index since last June.

The survey, which comes just days after Nationwide reported that UK property prices fell one per cent, shows that the average price of a house is now £166,58. Prices are 4.5 per cent higher on the same period last year.

Martin Ellis, housing economist at Halifax, said: “An increase in the number of properties available for sale has helped to reduce slightly the imbalance between supply and demand. At the same time, the bad weather in the first two months of 2010, together with the return of the lowest stamp duty threshold to £125,000, are likely to have had an adverse impact on housing demand.”

He added that the combination of these factors appeared to have helped to curb the upward pressure on house prices. Although historically low interest rates have remained supportive of the property market, tight credit conditions and high unemployment are forecast to continue.

Ed Stansfield, chief property economist at Capital Economics, said: “The latest house price fall may turn out to be a blip in the upward trend. But it looks less surprising if, like us, you believe that the house price recovery has run far ahead of the economic fundamentals. As such, it may ultimately be an early sign that last year’s house price recovery is beginning to unwind.”