House prices fall again but signs point to buyer return
The slump in house prices accelerated this month, dashing hopes that the decline was coming to an end.
Mortgage lender Nationwide said average house prices fell 1.8 per cent in February from £150,501 to £147,746.
It was a steeper decline than the 1.3 per cent seen in January and left house prices down a record 17.6 per cent, or almost £32,000, on a year ago.
They have lost a fifth of their value, or £38,298, since their peak in October 2007.
However, experts said interest among potential buyers is rising as they look to take advantage of lower mortgages and falling prices.
The Bank of England has cut interest rates to an all-time low of 1 per cent and the average tracker mortgage in London is now £380 a month cheaper than a year ago.
Still falling: Decline in house prices continues
Fionnuala Earley, chief economist at Nationwide, said: “Sharp cuts in interest rates have helped affordability, but have not yet affected housing market confidence sufficiently to boost the levels of new transaction activity or slow the pace of house price falls.
'Signs of increased interest in housing, as reported by the pick-up in new buyer enquiries, have yet to filter into sales, but do suggest that falling prices and interest rates are raising curiosity now, which could flow through quickly once confidence returns.
'Further cuts in rates will be welcome in the housing market, but the economic conditions that require them mean there is unlikely to be a swift turnaround in 2009.'
Howard Archer of Global Insight said: 'This reinforces our belief that house prices still have substantially further to drop. We are sceptical that sales will pick up substantially any time soon.'
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