UK house prices down 1.6%

Gloomy data on the British housing market continued to stack up today with Government figures showing prices fell by 1.6% during February.

Annual house price growth in Britain also continued its downward trend, falling to 6.7% for the year to the end of February, down from 8% in January, according to Communities and Local Government.

The figures come as the Royal Institution of Chartered Surveyors said a record number of surveyors had reported house price falls during March, overtaking figures set during the 1990s house price crash.

CLG said February's fall in prices had been driven by a 2.9% drop in the cost of flats, while detached and semi-detached homes lost 1.5% of their value, the cost of terraced properties fell by 1.1% and the price of bungalows was 0.6% lower.

Flats are typically first-time buyer properties, and the fact that these saw the biggest fall suggests people taking their first step on to the property ladder are continuing to be hit by the credit crunch, as lenders tighten their lending criteria and demand ever bigger deposits.

The average cost of a home in the UK stood at £217,737 (€270,436) at the end of February, its lowest level since June last year and down from £221,278 (€274,835) in January, which has itself been revised down.

The annual rate of house price growth fell in 10 of the UK's 12 economic regions, with only the North West and West Midlands seeing a rise.

The most dramatic falls in the pace of house price growth were in the North, where annual house price inflation more than halved from 8.4% to 3.7% in the space of a month.

There are also no areas where growth remains in double digits, with Scotland seeing the strongest gains of 9.7% during the past year, followed by London at 9.5%.

The average cost of a home bought by a first-time buyer fell by 1.5% during February to stand at £160,338 (€199,148), while former owner-occupiers paid 1.7% less at £251,797.

The Royal Institution of Chartered Surveyors also released data today showing that the proportion of surveyors who reported house price falls hit a new high in March, with 78.5% more surveyors saying the value of property had dropped, than those who reported a rise.

The figure is considerably higher than the 65.7% more surveyors who reported price falls in February, which itself surpassed the historic high set in June 1990 to be the worst figure since the survey began in 1978.

The group said the regional picture was "even more depressed", with 89% more surveyors reporting price falls in the East Midlands than those who said there were rises, while a net balance of 86% said property prices were going down in East Anglia.

But the group stressed that a shortage of homes being put up for sale should prevent a 1990s-style house price crash.

The figures come just a week after Britain's biggest mortgage lender, Halifax, said house prices fell by 2.5% in March, the biggest monthly fall since September 1992.