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UK house prices see first fall since June, says Halifax

Sale signs
Prices were affected by poor weather and changes to stamp duty relief

UK house prices recorded their first monthly fall since June with a 1.5% drop in February, the Halifax has said.

The drop was caused by the end of stamp duty relief, the cold weather and more properties being put up for sale. The average home is now worth £166,857.

The Halifax said that prices were still 4.5% higher than a year earlier, but the market had slowed in recent months.

The survey found that prices are also a full 8% higher than the lowest point of the market in April 2009.

Lending slows

The icy weather has been widely noted as a major factor in the latest round of data about the UK housing market.

Weather conditions slowed activity, with many potential homebuyers less tempted to look around homes or finding it difficult to travel.

The end of the temporary stamp duty relief was also regarded as a factor in the slowdown.

The stamp duty threshold dropped back to £125,000 on 1 January, after the threshold was at £175,000 for just over a year.

UK annual house prices

Both these issues were cited last week by the Nationwide building society , which said that prices had fallen by 1% in February.

Mortgage lending also suffered at the start of the year. Recent figures from the Council of Mortgage Lenders also showed that gross lending for home loans fell by 32% in January compared with December, reaching a 10-year low of £9.1bn.

The Bank of England also reported a 17% fall in the number of mortgages approved for house purchase during January.

But the Halifax, which is now part of the Lloyds Banking Group, also pointed to a rise in the number of people putting their home on the market as a factor affecting prices.

"An increase in the number of properties available for sale has helped to reduce slightly the imbalance between supply and demand," said Martin Ellis, Halifax housing economist.

Economy worries

The low supply of quality properties on the market was regarded as a key issue when prices were rising throughout the second half of 2009.

Figures from the Land Registry for properties in England and Wales - which lag behind other data but are considered the most comprehensive - showed that prices had risen for eight months in a row until the start of February.

There is huge uncertainty over mortgage finance, interest rate hikes and over people's job certainty
James Moss, Curzon Investment Property

However, the three-month on three-month figures from the Halifax show that the underlying rate of house price inflation had slowed in February.

Prices were 1.8% higher quarter-on-quarter, compared with a 3.2% increase in January, it said.

The state of the economy also remains a key factor in people's decisions about whether to move home, according to James Moss, director of Curzon Investment Property.

"There is huge uncertainty over mortgage finance, interest rate hikes and over people's job certainty. None of this is helped by the possibility of a hung parliament," he said.

Simon Rubinsohn, chief economist for the Royal Institution of Chartered Surveyors (Rics), said: "The likelihood is that prices will resume an upward trend, albeit at a more modest pace than seen during the latter part of 2009.

"However, the backdrop for the housing market is set to become gradually more challenging as public spending is cut, taxes go up and the cost of mortgage finance begins to rise."



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