House price fall is slowing

The rate at which house prices are falling showed further signs of moderating during April, figures revealed today.

The average home in England and Wales lost 0.3 per cent of its value during the month, the smallest drop for more than a year, according to the Land Registry.

The annual rate at which prices are declining also remained broadly unchanged at 16.2 per cent, although this is only just below February's record drop of 16.4 per cent.

The figures came as property intelligence group Hometrack said house prices remained unchanged in May - the first time in 20 months that the survey has not recorded price falls.

It said only 13 per cent of postcode districts reported a drop in prices during the month, compared with 58 per cent in January and more than 70 per cent last autumn.

The group attributed the improvement to a combination of stronger sales volumes, continued buyer interest and a dwindling supply of properties on the market.

The latest positive figures build on other upbeat data on the housing market, with Nationwide recently reporting a 1.2 per cent jump in UK house prices during May - the second increase in three months.

The rise also caused the annual rate at which property values are falling to slow sharply from 15 per cent to 11.3 per cent.

Estate agents have been reporting rising sales levels in recent weeks as buyers return to the market tempted by low interest rates and recent house price falls.

But economists have warned that, while activity appears to have passed its low point, any recovery will be constrained by the ongoing problems in the mortgage market and rising unemployment.

The Land Registry figures showed that sales levels remained depressed during the three months to the end of February - the latest period for which data is available.

An average of only 31,315 homes changed hands each month during the period, less than half the 75,374 sales per month recorded during the same period a year earlier.

Only four regions of England and Wales recorded price falls in April, with the North East seeing a steep drop of 2.6 per cent, while in the South West prices fell by 1.7 per cent and homes lost 1.4 per cent of their value in Yorkshire and the Humber and 0.4 per cent in the North West.

At the other end of the scale, the average cost of a property in London jumped by 1.4 per cent in April, while the East Midlands and West Midlands posted gains of 1.2 per cent and 0.8 per cent respectively.

The South West has seen the biggest fall in property values during the past year, with house prices in the region dropping by 18 per cent, while in the North East they have dropped by 17.3 per cent and in the South East they are 17.2 per cent lower.

The average cost of a home throughout England and Wales is now £152,898 - a level last seen in August 2004.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "The Land Registry data adds to mounting evidence that the decline in house prices is moderating appreciably."

But he added: "We remain highly sceptical that house prices have bottomed out. Significantly, it is not uncommon for there to be months of rising prices when house prices are still trending down."