House prices have seen the first decline for 10 months, falling 1.0 per cent in February, according to the latest figures from the Nationwide Monthly House Price Index.
The average agreed house price was £161,320 in February, a one per cent fall compared to January, when they were £163,481 following a 1.4 per cent rise on December's house prices.
Nationwide suggests that the decline in house prices could be due to the adverse weather conditions seen earlier in the month, when treacherous snow and ice kept many people inside, including potential home buyers.
Another factor to consider is the knock on effect of the expiry of the stamp duty holiday at the beginning of 2010, which saw a rush of applications at the end of last year.
Despite the drop in prices in February, house prices remain 9.2 per cent higher than at the same point in 2009, and Nationwide says it is too early to determine whether this is a temporary glitch due to external factors, or the start of a new trend, and part of the 'double dip' recession which some economists predict the UK is experiencing.
Commenting on the end of a nine month increase in house prices, Martin Gahbauer, chief economist at Nationwide, said: "The relatively smoother three month on three month rate of inflation remained positive at +1.6%, though this is down from +2.0% in January and a peak of +3.7% in September 2009. The annual rate of price inflation still managed to increase from 8.6% to 9.2% year-on-year."
The bad weather and end of the stamp duty holiday resulted in a sharp drop in new buyer enquiries, mortgages, and sales in January, which fed into lower house prices for February, Mr Gahbauer explained.
"Judging from the fall in retail sales during January, however, the housing market does not appear to be the only sector of the economy to have experienced a setback related to adverse weather and the expiry of economic stimulus measures," he said.
© Fair Investment Company Ltd