House prices drop in gloomy market

07/06/2011

By Helen James

Buyers continued to avoid the housing market in May and prices fell at the quickest rate for 19 months, new data shows.

Halifax said, based on average prices over the three months to May 31, homes have shed 4.2 per cent of their value over the last 12 months compared with the same three-month chunk of 2010.

That means the average home now costs £160,519 after the largest price fall recorded since the October of 2009. House prices were still slipping down according to a quarter-on-quarter analysis, used to give a smoother indication of the market direction. Halifax said homes lost 1.2 per cent of their value by that measure, the same drop recorded for the three-month period to the end of April.

The typical home now costs 1.4 per cent less than it did at the start of the year, although prices edged ahead by 0.1 per cent during May itself, following a steep 1.4% drop in April.

Halifax housing economist Martin Ellis 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."