Halifax: House prices fall 1.7% in April

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by Kay Murchie

In the latest survey of house prices, the Halifax has reported that house prices fell by a further 1.7% in April.

The report comes just a week after the Nationwide said house prices fell by 0.4% in April.

According to the Halifax, the average price of a home now stands at £154,716, and takes the annual decline to 17.7%.

The Halifax, now part of the Lloyds Banking Group, has warned that further falls are likely in the next few months due to the shortage of credit and rising unemployment.

However, the lender does highlight that there are “tentative” signs that the fall in sales are stabilising and mortgage lending is rising. Furthermore, the Royal Institution of Chartered Surveyors recently said interest from potential buyers is starting to gain “real momentum”.

However, the two reports from the Halifax and the Nationwide suggest that a recovery is not yet imminent despite positive reports of late.

Earlier this week, the Centre for Economics and Business Research (CEBR) said house prices have about a further 8% to fall before bottoming out.

The thinktank is predicting that prices will reach their trough in early 2010 and will see modest increases next year but real price growth won‘t start again until 2013.

According to Benjamin Williamson, one of the CEBR report’s authors, suggesting that the market has bottomed out is “slightly premature”.

Meanwhile, Ben Read, managing economist at the CEBR, said: “House prices were likely to remain in the doldrums for some time as what is likely to be a slow recovery in the real economy translates into weak wage growth and stubbornly high unemployment - factors that will put a fairly heavy lid on house price inflation.”

However, on a positive note, the fall in house prices means that affordability for first-time buyers is at its lowest level in over six years, according to the latest Halifax FTB Affordability Review.

The Halifax points out that the house price to average earnings ratio has fallen from a record high of 5.84 in July 2007 to an estimated 4.34 in March this year - a decline of 26%.