House prices in the three months to February were 1.1% lower than in the previous three months. This was a little lower than in January (-0.9%) and the fifth consecutive month that this measure of the underlying trend has been slightly negative.
On a monthly basis, house prices fell by 0.5% in February. This followed January's 0.6% increase and continues the mixed monthly pattern seen over the past year. Prices in the three months to February were 1.9% lower than in the same period a year earlier. This measure of the annual rate was little changed from the previous month (-1.8%) and has been between -1% and -2% for the last five months.
Nationally, the average level of house prices is very little changed to last spring. The UK average price in February, at £160,118, was similar to that in April 2011 (£160,393).
Commenting, Martin Ellis, housing economist, said:
"House prices in the three months to February were 1.1% lower than in the previous three months. There was a 0.5% decline in prices in February, largely offsetting January's 0.6% rise.
"Overall, prices nationally are at broadly the same level as last spring. This stability in prices is explained by the fact that market conditions have changed very little over this period with demand supported by low interest rates and supply remaining tight.
"Falling inflation should relieve some of the pressure on household finances over the coming months. Many of the economic statistics released in recent weeks have also been encouraging, suggesting that the UK may avoid slipping back into recession.
These developments are positive for the housing market outlook. Significant uncertainties, however, persist and the prospects for house prices during 2012 will, to a large extent, depend on events in the Eurozone and the potential knock-on effects on the UK."
Maria Kemp of estate agents, Kemp & Co, said:
"The three month decline in prices is a fair reflection of where the property market is at. Prices are by no means collapsing but are still under pressure. Many people are still very nervous about the health of the economy, and rightly so. This is tangibly feeding through into prices.
"There is definite momentum at the higher and lower ends of the market, but in the middle it's still very slow-moving. Typical family homes are almost at a standstill. Many families are struggling to secure the finance to fund a forward move, or simply aren't comfortable about committing to a considerable financial transaction at a time of real economic uncertainty.
"Buy-to-let continues to boom. More and more investors are buying up lower end properties and renting them out, as would-be first time buyers and below-average wage earners effectively resign themselves to becoming long-term tenants.
"There is always movement at the top end of the market as mortgage finance and confidence are less of an issue. One real concern is that the recent raft of SVR rises will start putting real pressure on household finances, in some cases forcing homeowners to sell.
"This could start applying extra downward pressure on prices moving forward — and that's before the base rate starts to move up."
Peter Hughes of West Sussex estate agents, Peter Hughes, said:
"The market is jumping around from one month to the next but the overall trend is flat. Activity levels are very low indeed. There is a major shortage of people looking to buy. Even attractive homes are struggling to sell, so the compromised properties out there don't have a chance.
"The sheer depth of the economic uncertainty is causing people to sit tight. When you're nervous about filling up your car, you're very nervous about buying a new home. It's a broken record by now but the rentals market is rampant. There is real activity among investors looking to buy property and secure the yields available.
"The market will bounce back, that goes without saying. I firmly believe that if you are in a position to do so, now could be a very opportune time to buy."
Matt Hutchinson, director, flat and house share website, Spareroom.co.uk, said:
"While the residential sales market suffers from a lack of stock and a shortage of confidence amongst buyers, the rental market is bursting at the seams, with demand massively outstripping supply and any decent rental properties being snapped up almost the moment they come onto the market.
"With many first time buyers seeing their deposit funds dwindling due to the general higher cost of living, we're unlikely to see a resurgence in buyer interest in the foreseeable future."
