House prices fell by a bigger-than-expected 1.7% in April and by 17.7% in the three months to April compared with a year earlier, the Halifax house price survey showed on Wednesday.
Economists had expected a fall of 1% on the month and a three-month annual decline of 17.7%. The mortgage lender said house prices were also 17.7% lower than in April last year and that prices have now fallen by 22% from their peak in August 2007.
The figures suggest the housing market is still a long way from recovery, despite some signs that activity levels may be stabilizing, and Halifax said prices were likely to keep falling for some time. Halifax said April’s fall took the average price of a home to £154,716 ($232,472) a level not seen since April 2004.
“We think conditions will remain challenging over the next few months. The fact that the economy is in recession and unemployment is rising sharply is not a great recipe for demand,” said Halifax chief economist Martin Ellis. “There are some signs that confidence is improving a little bit but we still expect further house price falls.”
Falling prices combined with record low interest rates have improved conditions for people who are able to invest in property. Halifax said the house price to earnings ratio, a key measure of affordability, fell to 4.26 in April, the lowest since September 2002.
But lending conditions remain tight, Ellis said. “There are some signs that more deals are becoming available and that the restrictions on credit availability are loosening up a little bit, but it’s still a lot tougher than a couple of years ago.” (Reuters)