House prices fall record 17.7 percent

By David Milliken

LONDON (Reuters) - House prices fell at a record pace last month to their lowest level since August 2004, with prices in the three months to February down 17.7 percent from a year ago, mortgage lender Halifax said 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.

Halifax's monthly survey showed a 2.3 percent fall in house prices in February alone, and means prices are 19.7 percent lower than from their peak in August 2007, with the average home now worth 160,327 pounds.

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, and makes for an annual decline of 17.8 percent -- only surpassed by December's 18.4 percent annual drop.

February's 17.7 percent quarterly annual decline, the annual measure favoured by Halifax, is the biggest since the lender started collecting monthly data in 1983.

"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.