UK House prices dipped by 2.3% during February, effectively wiping out the near 2.0% increase reported in January, the Halifax has said.

On an annual comparison, house prices in February were 17.7% lower in 2008. The annual rate of change (measured by the average for the latest three months against the same period a year earlier) fell from 17.2% in January to 17.7%.

The UK average price is now £160,327, close to the level in August 2004 (£159,799).

Martin Ellis, Halifax housing economist, said: “The average UK house price declined by 2.3% in February. This monthly decrease more than offset January’s 2.0% increase. Prices in the three months to February compared to the previous quarter, which provides a better indicator of the underlying trend, were 3.6% lower.

Whilst market activity remains at very low levels, there are some tentative signs that activity may be beginning to stabilise. The house price to earnings ratio – a key measure of housing affordability – has fallen to its lowest level for six years.
Continuing pressures on incomes, rising unemployment and the negative impact of the dislocation of the financial markets on the availability of mortgage finance are, however, likely to mean that 2009 will be another difficult year for the housing market.”