UK house prices unexpectedly fall in February - Nationwide

UK house prices unexpectedly fell back in February for the first time in six months, according to the latest survey from mortgage lender Nationwide.

House prices were down 0.3% on the month following a 0.8% increase in January, missing expectations of a 0.2% gain. On the year, house prices were up 2.2%, slowing down from a 3.2% jump the month before and well below the 2.6% rise expected.

Nationwide’s chief economist, Robert Gardner, said: "Month-to-month changes can be volatile, but the slowdown is consistent with signs of softening in the household sector in recent months. Retail sales were relatively soft over the Christmas period and at the start of the new year, as were key measures of consumer confidence, as the squeeze on household incomes continued to take its toll.

"Similarly, mortgage approvals declined to their weakest level for three years in December, at just 61,000. Activity around the year end can often be volatile, but the weak reading comes off the back of subdued activity in October and November (approvals were around 65,000 per month compared to an average of 67,000 over the previous 12 months). Surveyors report that new buyer enquiries have remained soft in recent months."

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "Nationwide’s data now chime again with the other timely measures from Halifax and Rightmove which suggest that house prices have little upward momentum. February’s year-over-year growth rate is the second lowest since the housing market began to revive in the middle of 2013.

"We expect house price growth to slow even further over the coming months. New buyer enquiries fell for the tenth consecutive month in January, according to RICS, while house hunter numbers were down 14% year-over-year, according to the National Association of Estate Agents.

"Moreover, mortgage rates, which have only edged up so far, look set to rise sharply as banks respond to the rise in wholesale funding costs since the start of this year and the closure of the Term Funding Scheme. Broadly flat prices wouldn’t be a disaster for the economy, but they would damage consumers’ confidence and persuade them to raise their saving rate, preventing the upturn in real incomes this year from lifting GDP growth."