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6 March 2008

House prices are continuing to slow down, says the Halifax, the UK's biggest mortgage lender.

According to its latest monthly survey, prices across the UK fell by 0.3% in February, taking the annual rate of inflation down from 4.5% to 4.2%.

That means the average UK home now costs £196,649, according to the lender's calculations.

The Halifax said prices would be flat over the coming year if the economy and employment continued to grow.

"House prices fell by 0.3% in February. Prices in the three months to February, however, were marginally (0.2%) higher than in the previous quarter," said Martin Ellis, the Halifax's chief economist.

"Whilst the housing market has slowed over the past six months, it is supported by sound economic fundamentals.

"Interest rate cuts by the Bank of England are also helping to underpin house prices," he added.

The UK property market has seen a "significant" decline in activity in the past year, said the Halifax.

It pointed to falling sales and a 39% drop in mortgages approved for home buyers.

However, the Halifax survey paints a rather different picture of developments in the past six months from that portrayed by one of its main rivals, the Nationwide building society.

In February, the Nationwide's survey registered its fourth monthly price fall in a row.

It also said the pace of decline was speeding up, because prices in the three months to February had been 1% lower than in the previous three.

However, the Halifax reckons that the slowdown has been much less dramatic.

It said that prices in the three months to February were still 0.2% higher than in the previous quarter.

Howard Archer, of Global Insight, said: "Overall, the data suggest that house prices are continuing to cool markedly, but they are not plunging through the floor."

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