House prices fell in July following two months of increases but are expected to remain largely flat for the rest of the year, a survey said today.
The average house price was £161,094 last month, which was 0.6% lower than in June and the previous July, according to the Halifax House Price Index.
However, prices have been fluctuating every month and, after rises in May and June, they are still 0.8% higher than in December and roughly the same as in the summer of 2009.
The lender expects prices to remain flat over the rest of 2012 unless the economy deteriorates, with levels of supply and demand set to remain stable.
The recent fluctuation in pricing may have been affected by a rush of first-time buyers looking to beat a stamp duty holiday at the end of March, after HM Revenue and Customs figures showed an 11% fall in sales between the first and second quarters of 2012.
Halifax housing economist Martin Ellis said: "At a national level, house prices have been very stable over the past year or so.
"Looking forward, we expect little change in prices over the remainder of 2012, so long as the economic climate in the UK does not worsen substantially."
There have been worrying signs for the housing market in recent weeks, after Nationwide said prices fell 2.6% in July, representing the biggest annual decline in almost three years.
And the Royal Institution of Chartered Surveyors reported the weakest readings for new buyer inquiries and new instructions for more than a year and a half in June.
Howard Archer, chief UK economist at IHS Global Insight, said the survey fuelled his fears that prices will drop a further 3%.
He said: "The Halifax data heighten our suspicion that house prices are headed lower over the rest of 2012, and very possibly beyond, in the face of limited activity, low and fragile consumer confidence, muted earnings growth and relatively high unemployment.
"With the economy slumping in the second quarter and the outlook highly uncertain amid worryingly strong domestic and international - mainly eurozone - headwinds, we believe that there is a very real and mounting danger that house prices could fall by appreciably more than 3% from current levels."
House prices have proved relatively resilient in recent years as the Bank of England kept interest rates at a record low of 0.5%, which has helped many home owners keep up with repayments and limit repossessions.
But at the same time, lenders have typically been asking for deposits of about 20%, which has restrained demand from buyers.
The Government launched its Funding For Lending scheme earlier this month, which it hopes will encourage banks to increase the availability of mortgages.
But some economists are sceptical as to whether it will significantly boost the housing market amid low consumer confidence.
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- Halifax (bank)
- HM Revenue And Customs
- Housing Prices
- Loans And Lending Market