House prices drop 1.7%, reports Halifax

House prices fell by 1.7% last month, according to data released today by the Halifax.

The UK lender's April figure follows a 1.9% decline the previous month, and takes the annual fall in prices to 17.7%. The average house price is now just £154,716.

However, prices in the three months to April were 3.3% lower than for the previous three months - a quarterly rate of decline slightly below the 5-6% recorded consistently between June 2008 and January 2009.

The 1.7% monthly fall registered by the Halifax is considerably higher than the figure of just 0.4% produced last week by rival lender Nationwide.

The falls recorded by both lenders dampen hopes sparked by a recent rise in buyer enquiries and new mortgage approvals.

Martin Ellis, housing economist at Halifax, said: “Rising unemployment, low consumer confidence and the reduced availability of credit are all expected to exert downward pressure on the housing market over the next few months. As a result, further house price declines are likely.”

The Halifax did, however, note “tentative signs of a stabilisation in activity albeit at a very low level,” pointing to a 19% rise in mortgages for house purchase between the final quarter of 2008 and the first quarter of 2009, on a seasonally adjusted basis.

Ellis highlighted the increasing affordability of UK homes, saying: “The house price to earnings ratio - a key measure of housing affordability - is at its lowest level since the autumn of 2002 at 4.26. Mortgage rate cuts have reduced monthly payments for the average existing borrower by £111 since October 2008, also boosting affordability.”