Housing market shows tiny price rise as it 'treads water'

HOUSE prices increased last month as the UK's property market continued to "tread water", newly released figures from a leading building society have shown.

The Nationwide building society figures, showing a 0.3 per cent rise, suggested that the recent fall in UK house prices may be slowing down, with the group expecting the property market to be "sluggish" during 2011.

Annual house price inflation remained in negative territory, with prices 0.1 per cent lower than in February last year, although this was a slight improvement on the fall of 1.4 per cent seen in the year to the end of January.

Prices were also broadly flat, with an average UK house price of 161,183 according to the quarterly change, which is generally seen as a smoother indicator of market trends.

The news sparked a claim from a senior MSP that Scotland's housing market was "not showing enough signs of recovery" and a call for banks to start making mortgages more easily available to help "families get on the property ladder."

Tory housing spokesman at Holyrood Alex Johnstone said: "We don't want house prices to rise, as we want housing in Scotland to be affordable.

"A big problem we face though is that the housing market is not showing enough signs of recovery.

"There's a real lethargy in the housing market in Scotland and these new figures appear to back that up.

"The real engine in the housing market lies with the banks, as they have the capacity to make mortgages available at reasonable rates to help families get on the property ladder."

However, David Marshall, mortgages expert at the Edinburgh Solicitors' Property Centre, warned that despite the figures, Scotland would still see a dip in property prices by the middle of 2011.

Mr Marshall said: "We're still likely to see prices going down by 3 per cent to 5 per cent by the middle of the year, as Scotland tends to lag a bit behind the overall UK figure such as this rise.

"The reason for this is that the balance of power in the housing market is very much with the buyer, as there are more properties for sale than there are buyers."

Nationwide's chief economist Robert Gardner, said that the new figures on property prices "shouldn't come as too much of a surprise."

He said: "Housing market trends are closely linked to wider economic prospects. Given that the recovery hit a soft patch at the turn of the year and looks set to remain sluggish in the year ahead, the property market is likely to follow suit, with relatively low transaction levels and prices moving sideways or modestly lower through 2011."

Nationwide said that demand for property had levelled out, as the uncertain economic outlook kept many potential buyers on the sidelines.

l The mortgage market began the year on the back foot with lending diving by 13 per cent in January.A total of 9.2 billion was advanced during the month, down from 10.6bn in December and the lowest level since February last year, according to the Council of Mortgage Lenders.

The fallmay have been caused by the severe weather during December, which prevented potential buyers house hunting.