Average UK house prices declined by 0.5 per cent in June, suggesting that the underlying pace of decline is easing, says research by Halifax.
The Halifax House Price Index for June 2009 shows a slowing in the rate of decline in house prices, but warns that the outlook remains uncertain for the remainder of 2009. The report's key highlights are as follows:
- House prices declined by 0.5 per cent in June.
- The mixed picture of monthly rises and falls so far this year contrasts sharply with the consistent succession of significant monthly declines in 2008.
- House prices declined by 1.9 per cent in Q2. This is the smallest quarterly fall since Q1 2008, and was significantly less than the 5-6 per cent declines seen in the last three quarters of 2008.
- The UK average price has returned to where it was five years ago (£157,091).
- Increased demand combined with a low level of availability of properties has helped to stabilise activity.
- Lower interest rates have boosted affordability. Monthly repayments accounted for an estimated 21.6 per cent of average gross household income in June, compared to a peak of 26.9 per cent in October 2008. The long-term average is 20.4 per cent.
- The cost of owning and running a home in the UK has fallen by almost a fifth over the past year, from £8,766 in Aril 2008 to £7,298 in April 2009, and is now at its lowest since 2006.
Martin Ellis, housing economist, commented: "These figures provide evidence that the underlying pace of house price decline is easing. There are further indications of a modest improvement in sales activity, albeit at a very low level. Industry-wide figures show that the number of mortgages approved to finance house purchase increased for the fourth successive month in May. Approvals were at their highest level since April 2008 and 10 per cent higher than a year earlier.
"Improvements in affordability and low interest rates have stimulated housing demand. This, together with a low level of properties available for sale, has helped to stabilise activity and reduce the underlying rate of house price decline in recent months."
But, he warned, "Whilst there have been encouraging recent signs of improvement, the outlook for the UK economy remains uncertain with unemployment set to continue rising for sometime. Overall, we expect to see a continuing mixed pattern of monthly house price rises and falls over the remainder of 2009."