U.K. House Prices Fell in February as Market Softened Further

U.K. house prices declined in February as Brexit and a weaker economic outlook reinforced a slowdown in the property market.

Values slipped 0.3 percent from January, Nationwide Building Society said on Thursday. The annual pace of gains fell to 2.2 percent from 3.2 percent, well below the rate of recent years.

The softening in the property market is also reflected in mortgage approvals, which are at a three-year low. The Bank of England will update those figures later on Thursday.

The decision to leave the European Union is weighing on the U.K. economy by creating uncertainty about the future and fanning inflation after the pound’s drop. The BOE has signaled it needs to continue raising interest rates, which could also dent demand for homes.

“How the housing market performs in the year ahead will be determined in large part by developments in the wider economy and the path of interest rates,” said Robert Gardner, Nationwide’s chief economist. “Subdued economic activity and the ongoing squeeze on household budgets is likely to exert a modest drag on housing market activity.”

The average house price in the country declined to 210,402 pounds ($290,000) from 211,756 pounds, the report showed.

— With assistance by Mark Evans