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UPDATE 1-UK house prices fall at fastest rate in a year-Halifax
March 4, 2011 / 9:01 AM / 7 years ago

UPDATE 1-UK house prices fall at fastest rate in a year-Halifax

* Biggest annual fall in house prices since Oct. 2009

* Halifax expects 2 pct house price fall in 2011

* Lack of supply seen capping decline

(Adds details, comment)

By Fiona Shaikh

LONDON, March 4 (Reuters) - British house prices fell at their fastest annual rate in more than a year in February, and worries about Britain’s recovery are likely to keep prices under pressure, mortgage lender Halifax said on Friday.

Halifax said house prices fell 0.9 percent in February, more than offsetting a rise of 0.8 percent in January. Prices fell 2.8 percent in the three months to February compared with a year ago -- the fastest annual pace since October 2009.

February’s monthly drop was twice as big as forecast by analysts, and contrasts with a survey from rival lender Nationwide earlier this week, which showed house prices rose 0.3 percent on the month. [ID:nSLASDE7QD]

Halifax said it expects house prices in 2011 as a whole to fall by around 2 percent, as uncertainty about the economic outlook weighs on housing demand.

Most economists reckon house prices will dip this year as tight credit conditions and a weak economic recovery deter homebuyers.

“It is clear that critical to the development of house prices over the coming months will be the amount of houses coming on to the market, mortgage availability, how well the economy and jobs hold up as the fiscal squeeze increasingly kicks in, and what happens with interest rates,” said Howard Archer, economist at IHS Global Insight.

Official data earlier this week showed mortgage approvals are running at just half their long run average, implying that house prices have limited room for growth.

But uncertainty about the housing market is also discouraging people from putting their homes up for sale, which should prevent a sharp downturn in prices, Halifax said.

“Fewer properties have been coming onto the market in recent months,” said Halifax economist Martin Ellis.

“This trend, if sustained, should improve the balance between demand and supply and help to prevent a more significant fall in house prices.”

The average price of a home stood at 162,657 pounds last month on the Halifax measure.

Reporting by Fiona Shaikh; Editing by Ruth Pitchford

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