UK House Prices Fall

House prices in the UK fell last quarter, according to the new Halifax House Price Index, with the average cost of buying a home 0.5 per cent lower than in the first three months of the year, says Zoopla.

This represents the smallest quarterly fall since the second quarter of last year, with overall prices in June 3.5 per cent lower than at the same point in 2010.

According to the report, lower interest rates have also contributed towards an improvement in affordability, with greater interest in mortgages and the take-up of such products seen in the last three months.

Commenting on the figures, housing economist Martin Ellis said: "Low interest rates, an increase in the number of people in employment and some tightening in market conditions earlier in the year are likely to have been the main factors behind the recent improvement in price trends."

He added that a slowly-improving economy and sustained low interest rates should help to support "broad stability" in the market over the coming months. He believes that inflation, unemployment, high mortgage deposits and above all high interest rates have all added to the pressures on public and have restrained buying ability of people. He says strict measures should be taken to accelerate the activity in markets.

However, the housing market is likely to continue to face "significant headwinds" which will constrain housing demand, Mr Ellis predicted.

Low earnings growth, higher taxes and relatively high inflation are all continuing to put pressure on household finances, the specialist noted.

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