UK house prices have dropped 1.8%.

According to a new report by Nationwide, February saw another fall in house prices as the UK housing market struggles in the recession.

The latest drop in prices means that the average value of a house has fallen by 17.6% over the year. The average house price is now £147,746, down from £179,358 in February 2008.

Despite cuts in interest rates making property more affordable, there is still a lack of confidence in the housing market.

However, Nationwide states in the report that there is increased interest in housing, as noted by a rise in new buyer enquiries, but these enquiries have yet to filter through into sales.

Nationwide’s Chief Economist, Fionnuala Earley, said: “Further cuts in rates will be welcome in the housing market, but the economic conditions that require them will mean that there is unlikely to be swift turnaround in the housing market in 2009.”

The report also states that affordability has improved for first time buyers as mortgage rates and house prices continue to drop. These factors have piqued curiosity in many potential house buyers, but the large deposits now required to buy houses is an added constraint.

Ms Earley added: “While lower interest rates alone will not lead the housing market to suddenly pick up, more affordable loans will provide support for both new and existing borrowers in the weak economic environment.

“It is too early to say that the market has reached its trough, given the economic recession, however, falling house prices and interest rates have made the situation for borrowers today much easier than it might have been.”