House prices fall modestly in February

LONDON (Reuters) - House prices fell again in February, the country's biggest mortgage lender said on Thursday, suggesting recent interest rate cuts have done little to support the market.

The Halifax house price index showed property prices fell 0.3 percent last month, slightly more than the 0.2 percent forecast in a Reuters poll.

That left house prices 4.2 percent higher in the three months to February than a year earlier, the weakest annual rate since October 2005.

The figures chime with other indicators that suggest the property market is feeling the pinch from tighter credit conditions and affordability constraints.

A survey by the Nationwide Building Society last week showed house prices fell by 0.5 percent in February to post their fourth successive monthly decline.

The Halifax survey showed prices fell for three consecutive months at the end of last year.

"Given the reliable upstream leading indicators such as mortgage approvals, these are the sort of numbers we're going to have to get used to," said Alan Clarke, economist at BNP Paribas. "I'm pretty confident that prices this year will fall about 5 percent."

Mortgage approvals fell to their lowest since records began in 1999 at the end of last year and have shown little recovery since.

The Bank of England cut interest rates in February for the second time in three months to shore up the economy in the face of the credit squeeze. It is widely expected to leave rates at 5.25 percent when it concludes this month's policy meeting at 12:00 p.m.