House price fall continues

House prices fell for the third month in a row in January, a survey by the Nationwide has shown.

The building society said the survey revealed that house prices fell by 0.1% in January, taking the average cost of a house to £180, 473.

This is in line with most other research into the housing market. Many surveys have suggested that house prices have been hit by higher interest rates and tighter lending criteria.

Quarterly figures released by the Nationwide showed that house prices fell by 0.3% in the quarter to January. This compares to a 0.9% rise the previous month.

Martin Gahbauer, senior economist at the Nationwide, said: “The weakening trend in house prices during the last three months is consistent with the loosening in housing market conditions that has become increasingly evident in the data.

“Key indicators such as mortgage approvals and the sales-to-stock ratio have now fallen close to or even below the troughs reached in late 2004, a period that was followed by a year of very subdued price growth.

“Undoubtedly this signals a cooling in annual house price inflation during the months ahead.”

However, the Nationwide survey also said the building society believed that there are signs the drop in demand is “bottoming-out”, as buyers anticipate more interest rate cuts throughout 2008.

The Monetary Policy Committee voted to hold interest rates at 5.5% in January, although many economists are predicting a cut when the committee next meets.

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