House prices resumed their slide in April, data from mortgage lender Nationwide showed today, suggesting last month's rise was no more than a blip.
A separate survey, however, provided a glimmer of hope that the recession may have passed its lowest point. Pollsters GfK found consumers were less gloomy this month than at any time in the past year and less pessimistic on the economic outlook than at any time since August 2007.
Nationwide said the average house price fell 0.4 per cent on the month, partly reversing a surprise 0.9 per cent rise in March. Prices were 15 per cent lower than a year earlier and down a fifth from peaks set in October 2007.
There have been a few tentative signs that housing market activity may be stabilising but little sign yet that prices have found their floor.
"We believe that house prices still have some way to fall, although we do expect the rate of decline to moderate over the coming months," said Howard Archer, economist at IHS Global Insight.
The GfK/NOP consumer confidence index rose three points to -27, its highest since April 2008. Nevertheless, compilers of the poll said that unusually sunny weather over the Easter holiday period may have influenced the result. The poll was also conducted before the Government's annual budget.
Nationwide said Government initiatives to boost lending and help first-time buyers get on the property ladder were welcome but would not turn things around.
"For the most part, buyers will remain cautious as long as they think that prices will continue to fall," said Fionnuala Earley, Nationwide's chief economist. "Economic fundamentals will continue to dominate housing market prospects."
The economy is expected to shrink by more than 3 per cent this year, its sharpest contraction since the Second World War.
While record-low interest rates have fuelled a rise in homebuyer enquiries, mortgage lenders are still reluctant to lend to those without a significant equity cushion.
Job insecurity is also a powerful deterrent. The number of Britons out of work has risen to a decade high above 2 million and is expected to hit 3 million by the end of the year.
There was evidence today that the recession and weaker pay growth were continuing to keep a lid on inflation expectations, despite record low interest rates and the Bank's decision to pump money into the economy.
Figures from YouGov/Citi showed inflation expectations for the next 12 months were steady at 1.8 per cent in April, close to the central bank's 2 percent inflation target.