Tuesday 28th February 2006
New figures from Nationwide have put into doubt claims that the UK property market is regaining strength.
The building societys house price report shows that the average house price fell by 0.2 per cent in February, following strong rises in January.
According to the figures the average home now costs £158,573, an annual rise of 3.7 per cent.
Nationwides Senior Economist Greg Fuzesi questioned whether the normal spring flurry of activity in the housing market would occur.
He said: "House prices tend to move seasonally, driven up by higher demand and activity in the warmer months and falling off towards Christmas.
"Just as the trading period over Christmas is crucial for the retail sector, the spring and summer are crucial for the housing market."
He added: "However, the number of mortgage approvals for house purchase rose sharply throughout 2005, reaching another high of 122,000 in December. This raises the question of how much demand remains in the market to be unleashed in the spring."
Mr Fuzesi went on to explain that there were two reasons why the pickup in activity this spring might not turn out to be strong.
He said: "Firstly, many first-time buyers continue to be priced out of the market.
"Secondly, uncertainty about the strength of the economy may lead to the delay of some house purchase decisions. A complicating factor is that buy-to-let investors seem to have been behind some of the increase in recent activity. This situation makes forecasts more difficult."
Doubts over the future of the economy were also raised with lower retail spending in January while the labour market has also weakened and earnings growth has moderated.
Mr Fuzesi said: "With investment spending by businesses continuing to disappoint, the UK economy remains highly reliant on strong consumer spending.
"However, high debt levels, high fuel prices, a weaker appetite for borrowing and uncertainty over pensions pose some downside risk to the economy."
He added that if the recent strengthening of the housing market failed to persist, consumers could be discouraged from spending, leaving doubts over the strength of the economys recovery in 2006 and how it could support a strong housing market. 
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