The modest fall continued an underlying trend that has persisted over the past 12 months causing the average house price in May to fall to £160,519.
This figure is 4.2% lower than measured from the same three month period a year earlier, the biggest annual drop since October 2009.
However the index outlined that modest improvements had been made in the balance between the supply and demand of housing, stating that the ratio of house sales to the stock of unsold properties on surveyors’ books edged up for the third successive month in April, according to the latest Royal Institute of Chartered Surveyors’ monthly survey.
The index highlighted the latest mortgage approval figures from the Bank of England stating that industry-wide approvals in the three months from February to April were 2% higher than the preceding three months. Halifax claims that the number of mortgages approved to finance house purchases is a leading indicator of completed house sales.
In line with the International Monetary Fund’s verdict on the UK economy on Monday, Halifax also expects a moderate improvement in economic activity during the remainder of 2011 stating that combined with persisting low interest rates, an improved economy should support housing demand and prevent a further marked fall in prices and help stabilise property values later this year.
The Land Registry also recorded falling prices in England and Wales although it noted some distinct regional variations. The Registry revealed that London prices were up 5% in the year to April, whereas prices in the north-east of England fell by 8% over the same period.
Mark Ellis, housing economist, said: "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.”
