Lenders clash over fall in house prices

The feverish speculation over the housing market descended into farce yesterday when a survey said the price of the average home fell £335 last month, just days after a rival indicator said it surged £2,321.

Halifax, Britiain's biggest mortgage lender, said prices fell 0.4 per cent in March, bringing down the annual rate of house price inflation to 13.5 per cent from February's 15 per cent. Last week the Nationwide building society said prices rose 16.2 per cent in the year to March - the fastest since 1989 - on the back of a record 2.3 per cent monthly rise. The two sets of figures will leave the Bank of England unsure about the state of the housing market as it decides whether to raise interest rates again. It will announce its decision at noon today.

The sharp difference of opinion, at a time when house prices are being blamed for four recent rate rises, will lead to calls for an official index of house prices. Geoffrey Dicks, an economist with Greenwich NatWest in the City, said that over the past two months, Nationwide's index had risen 4.5 per cent while Halifax's had fallen 1.3 per cent. "We don't have a clue what is going on in the housing market and that's not helpful," he said.

Martin Ellis, Halifax group economist, said it believed its figures were reliable. "We have clear signs elsewhere that the market is slowing down," he said. Halifax said last month's fall in house prices was a sign that recent rises in interest rates and mortgage bills had begun to slow the growth in the housing market.

It added that annual house price inflation has now fallen from a peak of 16 per cent in January. That fits with the Bank of England's forecast that house price growth will slow to 9 or 10 per cent by the end of 2000.