Falling house prices ease in new recovery hope

Published 08th Jul 2009

Falls in house prices eased in June, offering fresh evidence that confidence is returning to the market, according to Halifax.

There was a 0.5 per cent decline in house prices in June, Halifax said. In the three months to the end of June, house prices declined by 1.9 per cent, the smallest quarterly fall since the first three months of 2008.

Martin Ellis, Halifax's housing economist, said: "These figures provide evidence that the underlying pace of house price decline is easing."

The June decline brought the annual fall in house prices to 15 per cent, taking down the value of the average home to £157,713.

Analysts had forecast a fall of 0.7 per cent on the month, for a three-month annual decline of 14.7 per cent.

The report from Halifax, which is part of Lloyds Banking Group, showing house prices falling 0.5 per cent month-on-month in June emerged after the bank said that prices rose 2.6 per cent in May. However, the annual fall has narrowed to 15 per cent from a rate of 16.3 per cent in the three months to May.

Halifax’s data for June contrasts with Nationwide, which found that house prices rose by 0.9 per cent month-on-month in June, which was the third increase in four months.

Thousands of homeowners have been burnt by the shrinking value of their properties, resulting in many facing negative equity, where properties are worth less than a borrower's mortgage debt. Some commentators believe there is tentative evidence that prices have bottomed out, although the market remains fragile.

Howard Archer, chief UK and European economist at IHS Global Insight, said the data was still too mixed to be able to call the bottom of the market.

"We believe that further relapses in house prices remain highly likely, and they could yet fall by another 10 per cent from current levels. Much will clearly depend on whether or not the economy can sustain its recent overall improvement, how much further unemployment rises and how many properties come on to the market over the coming months," Mr Archer said.

Source: ' Times '

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