After the rise, house prices slip again

(Getty Images)

House prices resumed their downward trend during June - dropping by 0.5 per cent, Britain's biggest mortgage lender said today.

The fall, which followed a 2.6 per cent rise in May, left the average UK home costing £157,713, in line with prices during the second quarter of 2004, according to Halifax.

But the group said there are signs that the rate at which house prices are falling is easing.

House prices dropped by only 1.9 per cent during the three months to the end of June, the smallest quarterly fall since the beginning of 2008, and well down on declines of between 5 per cent and 6 per cent during the three final quarters of 2008.

The annual rate at which prices are falling also eased to 15 per cent, compared with 16.3 per cent in May - based on average prices during the previous three months compared with the same period a year earlier.

Martin Ellis, Halifax housing economist, said: "The mixed picture of monthly rises and falls so far this year contrasts sharply with the consistent succession of significant monthly declines recorded in 2008. This indicates that the underlying rate of decline in house prices has eased.

"Whilst there have been encouraging recent signs of improvement, the outlook for the UK economy remains uncertain, with unemployment set to continue rising for some time.

"Overall, we expect to see a continuing mixed pattern of monthly house price rises and falls over the remainder of 2009."

The Halifax figures contrast with those issued by Nationwide for June, which showed a 0.9 per cent rise in house prices - the third increase in four months.

There have been encouraging signs that activity in the housing market is picking up as buyers return, tempted by record low interest rates and the price falls seen during the past two years.

At the same time, a shortage of homes on the market is thought to be providing some support to house prices.

But economists have warned that any recovery in the housing market is likely to be slow and fitful, due to rising unemployment and continuing problems in the mortgage market.

Today's figures from Halifax suggest that the market has not seen the end of price falls.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "House prices have recently gained some overall support from markedly increased buyer interest, as well as from a lack of new properties coming on the market.

"Nevertheless, the Halifax data reinforce our doubts that house prices have bottomed out and we certainly do not think that we are now at the start of a renewed sharp upward trend."