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Halifax detects house price drop

Property prices across the UK fell by 0.3 per cent in February, new figures from Halifax have shown.

The annual rate of inflation for housing has therefore been reduced from 4.5 per cent to 4.2 per cent - and the average home now costs £197,000.

This is bad news for householders currently paying off their home loans - as, if the trend continues, the amount of equity they hold in their property will be reduced.

In turn, remortgaging and selling their homes on would become more problematic.

Halifax's figures also spell trouble for first time buyers - as a reduction in headline prices generally leads to lenders becoming more risk-averse and less willing to seek out new borrowers.

Nevertheless, chief economist at the mortgage provider Martin Ellis moved to calm fears of the market cooling.

"Whilst the housing market has slowed over the past six months, it is supported by sound economic fundamentals," he said.

"Interest rate cuts by the Bank of England are also helping to underpin house prices."

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