The average UK house price fell for the fourth straight month in February, but properties in London’s hotspots continue to soar.
Research by Nationwide Building Society that annual rate of house price inflation had sunk to its lowest level since November 2005, with prices falling 0.5% last month alone, and 1% in the last three months.
But contrasting research from estate agents Knight Frank found prime London properties – those valued at £2 million and above – have remained largely unblemished by the tumultuous market conditions, rising 0.6% in February and 2.8% since December.
Chelsea was the top performing area, with an annual growth rate of 30%.
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Trend won’t last long
The strong growth in the prime property sector is unlikely to be maintained, however, with Knight Frank warning of a “continued slowdown” in the near future.
As for the mainstream market, Nationwide chief economist Fionnuala Earley suggests the situation is not quite as gloomy as it may at first seem. “The trend in prices is clearly weakening, but the size of the drop in the annual rate between January and February perhaps overstates the rate of cooling as it partly reflects the particularly strong increase in prices in February last year,” says Earley.
The 3-month on 3-month rate of price growth rate fell to -1% in February, down from -0.4% the previous month. The average price of a typical property now stands at £179,358, compared to £180,473 at end January.
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FTBs no longer biting
Yet even though house prices have fallen, two thirds of potential first time buyers (FTBs) have shelved plans to climb on the property ladder due to fears over market volatility and a potential price crash.
Research by Abbey found that 14% of non-homeowners were considering buying their own place at the start of the year, but 64% have since changed their plans. When asked what had put them off, three quarters (74%) cited possible house price falls and economic uncertainty.
According to Abbey mortgages director Nici Audhlam-Gardiner, FTBs in Wales and the South West have been affected the most of any part of the country, with 87% of this potential buyers deciding to hold off their decision. "We know how difficult it is for first-time buyers to get on the property ladder, and this is exacerbated by current market uncertainty.
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