The Halifax reported a small monthly fall in house prices during February. The monthly decline of 0.3% took the annual inflation rate down to 4.2%. Although house prices have now fallen for 3 months, the fears over a huge housing slump in the UK are not materialising just at the moment. Certain factors are underpinning house prices (according to the Halifax average UK house prices are just over £197,000)
- Low Interest rates. Interest rates of 5.25% make mortgage payments relatively affordable. If anything interest rates are likely to go down (even if mortgage lenders are not always passing the base rate cuts onto consumers)
- Supply and demand
- Resilient Buy to Let Market – strong because of rising demand in the renting sector
However, the Nationwide suggested an acceleration of house price falls in February and pointed to the dramatic falls in mortgage lending as evidence the housing market could face a difficult year ahead.
