House prices dropped by 0.2% in February, according to the Nationwide?s latest data. But the lender is convinced there is still strength in the market; house prices have risen 7.5% in the three months since November and increased by a strong 1.5% in January. ?We would caution against placing too much weight on the latest figure. Experience last year was that any moderate declines in house prices were generally reversed the following month,? said Greg Fuzesi, Senior Economist for the Nationwide.

?The latest decline needs to be taken in the context of a strong rise in January,? Mr. Fuzesi continued, adding that the property market is about to enter its busiest period. According to the Nationwide, anecdotal evidence suggests that last year?s buyers? market has largely been eroded by a shortage of new sales instructions and agents across the country are noting a shortage of stock.

Although the latest figures are not a cause for alarm, the Nationwide believes they do raise some doubts about the growing sense of optimism in the market. If the economic drivers of the housing market remain subdued, then softer prices will become the norm, it is forecasting.

?As we enter the all-important house buying season in March, the prospects for both house prices and interest rate policy will become clearer,? said Mr. Fuzesi. ?Although far from conclusive, today?s data suggests that renewed optimism in the market could yet prove to be short-lived.?

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