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British house prices in record annual fall in Feb

BRITISH house prices fell at their biggest annual rate since at least 1952 during February, despite some tentative signs that massive interest rate reductions from the Bank of England are beginning to stoke interest in the market, one of the country's biggest mortgage lenders said today.

In its monthly survey of the sector, the Nationwide Building Society said house prices slumped 17.6 percent in the year to February. That was more than the 16.6 percent recorded in January and the biggest fall since Nationwide started compiling figures in 1952.

On a month-on-month basis, house prices were 1.8 percent lower, more than the 1.3 percent decline recorded in January. February's decline was the 16th consecutive monthly fall as the housing market continued to suffer from the seizing up of credit, rising unemployment and Britain's deepest recession in nearly 30 years.

"Sharp cuts in interest rates have helped affordability, but have not yet affected housing market confidence sufficiently to boost the levels of new transaction activity or slow the pace of house price falls," said Fionnuala Earley, Nationwide's chief economist.

Since last October, the Bank of England has slashed its benchmark interest rate by 4 percentage points to the current historic low of 1 percent, triggering sharp declines in flexible mortgage rates.

Earley said early signs of increased interest in housing, as reported by the pick up in new buyer enquiries, have yet to filter into sales, but do suggest that falling prices and interest rates are "raising curiosity now, which could flow through quickly once confidence returns."


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