House prices dip for third month

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The Independent Online

Property prices fell for the third month in a row during June as the housing market recovery showed further signs of faltering.

The average cost of a home dropped by 0.6 per cent during the month, following a 0.5 per cent slide in May and a 0.1 per cent decline in April, according to Halifax.

The group said an increase in the number of homes being put up for sale in recent months had eased the mismatch between supply and demand, and reduced the upward pressure on prices. House prices during the three months to the end of June were 0.1 per cent lower compared with the first quarter of the year.

Martin Ellis, Halifax housing economist, said: "This pattern is in line with our view that house prices will be broadly unchanged over 2010 as a whole."

The figures, which follow a raft of recent gloomy data on the housing market, will further stoke speculation that the house price recovery is running out of steam.

The price increases seen during 2009 were fuelled by a shortage of properties on the market.

But estate agents have reported a sharp increase in the number of homes for sale since the Government abolished home information packs.

At the same time, activity in the housing market has failed to pick up significantly following a subdued start to the year.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "The third successive drop in prices reported by the Halifax in June adds to a recent flurry of soft data on the housing market and stokes our relative pessimism over the housing market.

"Indeed, we increasingly suspect that house prices will be only flat over the rest of this year. We had previously thought a small rise was possible."

Halifax also reported a decline in the annual rate of house price inflation, with prices during the three months to the end of June 6.3 per cent higher than they were a year earlier, down from an annual increase of 6.9 per cent in May.

But despite the recent declines, house prices are still 7.5 per cent higher than they were at their low point in April last year at £166,203, although they remain 17 per cent down on their 2007 peak.

Paul Diggle, property economist at Capital Economics, said: "Today's figures from the Halifax showing accelerating house price falls fits with our long-held position that we will see a second leg of the house price correction soon.

"Today's data strongly suggest that prices will close 2010 below their end-2009 level. We expect them to continue falling in 2011."