According to Telegraph, house prices fell at their fastest annual rate for 19 months during May as buyers continued to stay away from the market. Homes lost 4.2 per cent of their value during the past year, based on average prices during the three months to the end of May, compared with the same three-month period of the previous year, according to Halifax. It was the biggest annual drop recorded since October 2009 and left the average home costing £160,519.
Martin Ellis, Halifax 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."
But he said the group expected a "moderate improvement" in the economy during the rest of the year, and this, combined with ongoing low interest rates, should help to support housing demand. He said: "This should prevent a further marked fall in prices and help to stabilise property values later in the year."
The Bank of England reported a 4 per cent drop in the number of mortgages approved for house purchase during the month, and this fall in activity will have had a knock-on effect on completed sales during May.
Howard Archer, chief UK and European economist at IHS Global Insight, said: "We maintain the view that house prices are likely to end up declining by some 10 per cent overall by mid-2012 from their 2010 highs. This implies that they will fall by around 5 per cent to 8 per cent from current levels depending on which measure you take."
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