LONDON - House prices in the UK continued on a downward trend for the third month running in January posting a 0.1 percent drop, according to the latest report from the Nationwide building society.
Consequently the annual rate of house price inflation dipped to 4.2 percent in January from 4.8 percent in December. This figure is the lowest rate for the parameter since December 2005. Nationwide said the average price of a home in England and Wales was £180,473.
This represents a rise of £7,249 over the last year, the report added.
"On the one hand, house buyers are being pressurized by elevated house prices, modest real disposable income growth and the significant overall rise in mortgage rates since August 2006," said Howard Archer, the chief UK Economist at Global Insight.
Many analysts feel the gloomy picture in the housing market will force the bank of England's Monetary Policy Committee to cut interest rates by a quarter point from 5.5 percent to 5.25 percent when it meets on February 6. In December the MPC had voted to cut interest rates from 5.75 percent to 5.5 percent, but had held them steady in January.
Nationwide's report follows a Bank of England report, which said mortgage approvals had fallen to their lowest level since 2005 during the last month.
