The latest property index has shown that a larger number of properties available for sale resulted in UK residential real estate prices dropping unexpectedly in February by 1.5%, which represents the first drop since June, 2009. This drop follows on from a revised 0.4% rise in January, and resulted in prices being 4.5% up in the three month period to February, as compared with the same period last year, according to Halifax’s index.

The Halifax index also goes on to state that a variety of factors, such as inclement weather, increased supply, and the end of the tax holiday enjoyed by some house buyers all played their part in contributing to the drop in prices. Despite this, however, the report pointed out that property prices still remained 8% higher than in April 2009.

Martin Ellis, housing economist at Halifax, said that the increase in properties available for sale has aided in the reduction of the supply and demand imbalance. He went on to state that the poor weather seen in the UK during January and February-coupled with a low stamp duty threshold of £125,000-combined to adversely affect housing demand. According to Halifax, as of February 2010, the average house price in the UK stood at £166,587.

Halifax’s index is just the latest in a range of figures and reports indicating a slowdown in the UK housing and property market. The Nationwide Building Society also detailed a 1% drop in housing prices in February, and, along with this, the Bank of England also indicated that mortgage approvals dropped to an eight-month nadir in January.

Despite this cooling indicators, however, Hometrack recorded a 0.3% climb in house prices in February as compared to January. Added to this, regions such as London and the south east defy all cooling, and simply continue to climb. Hometrack’s figures also indicate that, in February, the housing market also saw the first Y-O-Y rise since March 2008. These figures stood at 0.4%, with house prices themselves rising across a quarter of all UK postcodes, something not seen for over two years.

Many analysts warn, however, that the housing and real estate markets in the UK lack genuine stability and solid foundations.  To underscore this, the number of agreed sales rose by only 10% in February, as compared to an average of 30% in past years. In combination with this, supply rose by just 4.6% as compared to an average previous yearly rise of 14%. Also, buyer registrations rose by just 8.3% as compared to an average rise of 24% for the same month over a consistent previous eight year period. This may be due to the fact that fewer first-time buyers are currently entering into the market due to economic difficulties and fewer bad credit mortgages are being issued as well due to changes in lender decisions.