House prices in the UK fell by 0.2% in February, according to the latest survey from the Nationwide building society.

The fall in prices cut the annual rate of prices to 3.7%, a drop from 4.4% reported in January.
The cost of an average house in the UK now costs £158,573 on the Nationwide surveys.

There was some good news in the Nationwide figures, house prices in the three months to February were up by 2% compared to the previous quarter. Nationwide said that this increase indicates that strength remains in the market.

But, underlying the growth, Nationwide said it still did not expect strong price rises during 2006.

Prospects for the housing market would become clearer when the house-buying season gets underway in March.

Commenting on the figures Greg Fuzesi, Nationwide’s Senior Economist, said: “House prices fell by 0.2% in February following a strong 1.5% increase in January. The average house price in the UK is now £158,578, 3.7% higher than at this time last
year.

The continued rise of our 3 month average since October 2005 still shows strength in the market and, significantly, this discouraged the MPC from cutting interest rates in February.

As we enter the all-important house buying season in March, the prospects for both house prices and interest rate policy will become clearer.

It will also show whether February?s fall is just a pause before the spring rush or the first sign of weak market fundamentals weighing down on prices. We expect the weaker economic factors to begin to dominate over the next 2-3 months and
to prevent strong house price rises in 2006.”