According to the latest figures from the Halifax, house prices fell by 0.5% in February, compared to the previous month. The bank cited the average home value at £160,118, which is 1.9% lower than one year earlier, with the three-month on three-month figure showing a drop of 1.1% in February. The house price drop in February came after a rise of 0.6% in January and is a contradiction of Nationwide’s figures for the month, which said that house prices had risen in February by 0.6% and by 0.9% over 12 months.
The reason for the discrepancy between the two lenders’ annual figures can be put down to the differing ways in which they calculate their figures. The Halifax compares the previous three months with the same three months a year earlier to give a smoother comparison, whereas Nationwide do a direct comparison of the equivalent months in each year.
Commenting on the figures, Halifax housing economist Martin Ellis said: “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.” He also went on to say that falling inflation should help ease the pressure on household finances and the prognosis for house prices during 2012, largely depended on events in the Eurozone.
The Halifax has recently, controversially increased its standard variable rate (SVR) on its mortgage products from 3.5 to 3.99%. RBS were the bank that took the lead in putting up rates, closely followed by Halifax and now others, such as the Yorkshire and Clydesdale banks, and the Bank of Ireland. Most of these interest rate increases will start to take effect from the 1st May 2012.
The general feeling amongst the industry experts, is that house prices are holding their own, but they could face a stiff test in the months ahead, depending on how the economy holds up to the Eurozone crisis. Of course, this is the overall picture, with the health of house prices varying greatly from region to region. London continues to enjoy growth, whilst other areas, such as the north east of England, for example, are experiencing substantial falls.
Sources: bbc.co.uk, Lloydsbankinggroup.com (image courtesy of overseaspropertymall.com)