Halifax: UK house prices down 0.3%

New research from the Halifax shows the average price for a property in the UK decreased by 0.3 per cent during February.

This represents the fourth consecutive monthly decline in prices, and sees annual growth slip back to just 4.3 per cent.

In the three months to February average annual increases all fell to 4.2 per cent, down from 4.5 per cent in the three months to January and a high of 11.4 per cent in the three months to August.

The research also finds the average price of a property in the UK increased by £4,390 over the past 12 months to £196,649.

"While the housing market has slowed over the past six months, it is supported by sound economic fundamentals. Interest rate cuts by the Bank of England are also helping to underpin house prices," said Halifax chief economist, Martin Ellis.

"Nationally, we predict that house prices will be flat in 2008."

Official figures from the Office for National Statistics (ONS) show employment has continued to increase over the past year, and now stands at a record 29.40 million.

This, along with lower interest rates - with the Bank of England making cuts of 0.25 per cent in December and February, to a level of 5.25 per cent – will ensure house prices do not fall dramatically, according to Halifax.

The bank also predicts the Bank's monetary policy committee (MPC) will cut the base rate twice more during 2008 – despite inflationary pressures.

The findings add yet more evidence to an already convincing argument the housing market is dramatically slowing.

Research from the Royal Institution of Chartered Surveyors (Rics) finds, this month, completed house sales in February were down 16 per cent on the level recorded in January.

There was also a 39 per cent fall in the number of mortgages approved for home purchase in January when compared to a year earlier, according to the Bank of England.

"Overall, the data suggest house prices are continuing to cool markedly, but they are not plunging through the floor. Nevertheless, the housing market clearly remains under substantial pressure from elevated affordability constraints and tighter lending practices," concluded Howard Archer, of analysts Global Insight.