The latest figures from Halifax show that house prices fell over the past three months by 1.2 per cent. The average home is now worth £160,519, a 4.2 per cent drop over the course of the year.
Halifax also said that while property sales remain subdued – five per cent down on last year – there does appear to be an increase in activity, with mortgage approvals or house purchases rising.
Martin Ellis, housing economist, said: “House prices continue to drift modestly downwards as measured by the underlying trend. Prices in the three months to May were 1.2 per cent lower than in the previous three months; unchanged from April. There was a 0.1 per cent rise in prices in May following April’s 1.4 per cent decline.
“Low earnings growth, higher taxes and relatively high inflation are all putting pressure on household finances. Confidence is also weak as a result of uncertainty about the economic and employment outlook. These factors are probably constraining housing demand and applying some downward pressure on prices.
“Overall, we expect a moderate improvement in the economy during the remainder of 2011, which combined with continuing low interest rates, is likely to support housing demand. This should prevent a further marked fall in prices and help to stabilise property values later in the year.”
