Economists and mortgage lenders yesterday abandoned hopes of a housing market recovery this year following fresh Halifax Building Society figures showing an accelerating fall in house prices.
Halifax's quarterly house price survey shows a fall of 1.6 per cent in the three months to the end of June, compared with the same period last year.
The society's survey also revealed that house prices declined 1.9 per cent in the 12 months to June, snowballing downwards from the 1.4 per cent recorded in the year to May.
Ciaran Barr, UK economist at Deutsche Morgan Grenfell, said: "We have been predicting a very small rise of 0.5 per cent for 1995. But it looks as if this is unlikely to be met.
"Loss of confidence and nervousness are the deciding factors in decisions by many first-time buyers to stay out of the market. Confidence has been influenced by a variety of events, including tax increases and cuts in mortgage interest payments to people becoming unemployed, together with the perception that insurance to replace any lost benefits is expensive."
Merrill Lynch, the investment bank, also predicted that the short-term outlook for the housing market was "not good', although it is not yet scaling down its prediction of a 2 per cent rise this year.
David Gilchrist, general manager at the Halifax, said unadjusted regional house prices were up 0.4 per cent in the previous three months. But these did take into account the fact that the second quarter is usually the busiest in the year.
Earlier this year, Halifax was predicting a 2-3 per cent rise in prices in 1995. "The underlying trend is now one of decline and there is unlikely to be any increase in prices in 1995," Mr Gilchrist said.
"If there is a reassuring factor, it is that house prices in some parts of the country, notably in London and the South-east, have done a bit better."
In Northern Ireland prices are up 3.2 per cent in the past quarter and have rocketed by 8.4 per cent in the past year, largely as a result of the IRA ceasefire. Average house prices there are now pounds 43,893.Reuse content