UK House Prices Situation: Small falls reported by largest mortgage lenders

UK House Prices Forecast: Falls expected to continue, but how far isn't clear

House Price Index Comparison: Nationwide vs. Halifax

The UK's two largest mortgage lenders, Halifax and Nationwide, have both published their house price reports for February in the last week.

Between them, these two mortgage lenders account for a pretty sizeable chunk of the UK mortgage market - so they should have a reasonably good idea of what's going on in the mainstream housing market (i.e. buyers with good credit, buying mid-priced, mortgaged houses).

Based on that logic, both Halifax and Nationwide should be seeing roughly the same house price trends - so are they? Here's what the two lenders had to say about house prices in February 2008 (equivalent figures for January in brackets):

Nationwide Monthly change: -0.5% (-0.3%)
Halifax Monthly change: -0.3% (0.0%)

Nationwide Annual change: 2.7% (4.2%)
Halifax Annual change: 4.2% (4.5%)

So although there are some differences, it's fair to say that both Halifax and Nationwide are seeing similar trends - a slow but steady reduction in average house prices.

The next obvious question is to ask what the future holds. Here's what Halifax and Nationwide have to say about the outlook for house prices in the rest of 2008:

Halifax said: "We predict that house prices will be flat during 2008 as a whole."

Nationwide were less certain. Fionnuala Earley, Nationwide's Chief Economist, commented that "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…"

Nationwide's report also concluded by saying that "Overall, it seems clear that we will not see recent rates of growth, in either the UK economy or housing market, repeated for some time."

Given that inflation means that Halifax's "flat" prices are actually falling in real terms, both Nationwide and Halifax appear to share a similar view of the housing market in 2008, suggesting that we are in for a rather subdued year.

Read our take on the Credit Crisis the effect on UK House Prices and Mortgages. A Special Report

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