UK house prices fall record 17.7 pct y/y in Feb

British house prices fell 2.3 percent in February and by a record 17.7 percent year-on-year, taking average prices back to levels last seen in August 2004, mortgage lender Halifax said in its monthly survey on Thursday.

The data is further gloomy news for the Bank of England's Monetary Policy Committee, which is expected to cut interest rates by half a percentage point to a record low of 0.5 percent later and set in motion a radical new policy of boosting the money supply to encourage lending.

February's monthly decline more than offset January's upwardly revised increase of 2.0 percent and was slightly worse than analysts' forecasts for a fall of 2 percent.

The annual decline — which is calculated by comparing prices in the three months to February with those a year earlier — is the biggest on record and means prices are down 19.7 percent from their peak in August 2007, with the average home now worth 160,327 pounds ($226,700).

"House prices remain very much on a downward track," said Howard Archer, chief UK economist at IHS Global Insight.

"While latest mortgage approvals data suggest that housing market activity may have bottomed out and survey evidence indicates that buyer enquiries have picked up significantly recently … we are sceptical that sales will pick up substantially anytime soon," he said.

Halifax's results closely match those published by rival lender Nationwide, which reported an annual decline of 17.6 percent for last month.

Halifax, now part of Lloyds Banking Group, said the ratio of house prices to earnings, a key affordability measure, was at its lowest for six years at around 4.4, down from 5.8 at the peak of the boom but still above its long-run average of 4.0.

"Continuing pressures on incomes, rising unemployment and the negative impact of the dislocation of the financial markets on the availability of mortgage finance are, however, likely to mean that 2009 will be another difficult year for the housing market," said Halifax chief economist Martin Ellis.