House prices continue to fall

House prices fell by 1.8% in February as sharp interest rate cuts and improved affordability failed to restore market confidence, the UK's biggest building society said today.
According to Nationwide's latest snapshot of the housing market, the average price of a UK home has fallen by 17.6% over the past 12 months, dropping by more than £31,000 to £147,746. Prices are now 20% down on their October 2007 peak of £186,044.
The society said that despite swingeing interest rate cuts, which have brought the Bank of England base rate down to 1%, its lowest ever level, would-be buyers were still holding back.
Nationwide's chief economist, Fionnuala Earley, said: "Early signs of increased interest in housing, as reported by the pick-up in new buyer enquiries, have yet to filter into sales, but do suggest that falling prices and interest rates are raising curiosity now, which could flow through quickly once confidence returns."
However, she added: "Further cuts in rates will be welcome in the housing market, but the economic conditions that require them will mean that there is unlikely to be a swift turnaround in the housing market in 2009."
Figures published this week by the British Bankers' Association showed an upturn in the number of mortgages approved for house purchases in January, and estate agents have been reporting an increase in interest from potential buyers.
Some will have been encouraged by recent price falls and falling interest rates, which have made homes much more affordable for first-time buyers. However, mortgages remain hard to come by and lenders are still offering their best deals to those with large deposits