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House prices up a fraction in March

House prices edged 0.1 per cent higher during March, helping improve the quarterly rate of decline in Britain’s faltering property market, according to the Halifax.

The slight improvement last month came after prices dropped 0.9 per cent in February and eased the quarterly fall to 0.6 per cent between January and March.

The average UK house price stood at £162,912 in March, but this was 2.9 per cent lower than a year earlier as values continued to fall at their fastest annual pace since October 2009.

The three-month measure, which is generally seen as a smoother indicator of trends, suggested the market was showing some signs of stabilisation, according to analysts.

The quarter-on-quarter fall in the first three months of this year was lower than in the third and fourth quarters of 2010, when prices fell 1 per cent and 1.1 per cent respectively.

Halifax said improvements in the UK jobs market were likely to be responsible.

Recent official figures showed the number in employment rose by 32,000 in the three months to January as more people secured full-time jobs.

But the lending giant cautioned that government austerity measures and concerns over the wider economy were expected to hamper progress in property prices this year.

It is forecasting a 2 per cent fall in values over the year as a whole.

Halifax housing economist Martin Ellis said: “Uncertainty over the general economic outlook and individual financial circumstances are likely to constrain housing demand, resulting in some modest downward pressure on prices.”

Today’s figures are broadly consistent with data last week from Nationwide, which reported a 0.5 per cent increase in March.

But Howard Archer, chief economist at IHS Global Insight, said forthcoming pressures “do not bode well” for house prices.

“We suspect that the tighter fiscal policy really kicking in from April and likely gradually-rising interest rates will exert downward pressure on the housing market,” he said.

There could be some support if limited numbers of houses are put up for sale, while growth in the economy and the future path of interest rates will also be key for the property market, he added.

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