House prices fell at their fastest annual rate for 16 months during February as faltering demand continued to put downward pressure on the property market, figures showed.
Property values were 2.8% lower than a year earlier, the biggest drop since October 2009 – based on average prices during the three months to the end of February and the same period a year earlier, Halifax said.
Prices fell by 0.9% during February itself, more than wiping out January’s 0.8% rise.
The latest figures continued the recent pattern of house prices rising during one month and dropping during the next, with Halifax recording five increases and seven falls during the past 12 months.
The three-month-on-three-month measure, which is generally seen as a smoother indicator of market trends, showed a 0.4% decline, suggesting prices are moving steadily downwards but at a slower pace than seen during the final quarter of 2010. The drop is also well down on quarterly falls of 5% and 6% recorded during the second half of 2008.
House prices remain under pressure due to a lack of demand, as people delay moving home in the face of the uncertain outlook for both the property market and the wider economy.
Meanwhile, the problems in the mortgage market mean those who do want to press ahead with a purchase are struggling to raise the money they need, but there is evidence that the number of homes being put up for sale is beginning to slow, which should offer some support to prices going forward.
Martin Ellis, Halifax housing economist, said: “Overall, we expect a modest 2% decrease in house prices in 2011. Uncertainty over the economic outlook is likely to weigh down on housing demand this year.”
Howard Archer, chief UK and European economist at IHS Global Insight, said: “The Halifax house price index has actually been pretty volatile over the past few months showing significant fluctuations around an overall modestly declining trend. We expect this trend to continue for some time to come.
“It is best to try and draw an overall impression on all the data available relating to both house prices and activity. And this to us suggests that the housing market is still stuck in the doldrums.”