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• House prices fell by 1.9% in March, the lender says
• Figure contradicts Nationwide, which said house prices rose
House prices fell by 1.9% in March, but the annual rate of decline slowed slightly, figures from Halifax showed today.
March's decline, which took the average price of a UK home down to £157,326, was smaller than the 2.3% fall recorded in February. The annual rate of deflation as shown by the lender's measure, which compare the last three months' average with the same period last year, also reduced, from 17.7% to 17.5%.
Prices are now more than £33,000 lower than in March last year, according to the Halifax.
The monthly figures run counter to those published yesterday by rival lender Nationwide, which showed a 0.9% rise in house prices over the month. This is not the first time the indices have disagreed – in January, Halifax reported a price rise while Nationwide said prices had dropped, and such volatility is common when transaction levels are so low. Yesterday, Nationwide said its figure was a surprise and should not be taken as a sign that prices had bottomed out.
Martin Ellis, Halifax's housing economist, said that although the number of sales completed in England and Wales halved between 2007 and 2008, there were some "very tentative" signs that activity was beginning to stabilise.
However, he said house prices were likely to continue to fall. "Conditions in the housing market are likely to be tough during the remainder of 2009 despite the improvements in affordability.
"Increasing unemployment, low consumer confidence and the constraining effects of the continuing dislocation of the financial markets on the availability of mortgage finance are all likely to exert downward pressure on the market over the coming months."
Stalling market
The housing market has stalled over the past year as buyers have been deterred by falling prices and a squeeze on credit, which has made it much harder to raise a mortgage.
There are signs this could get easier over the coming months, with the Bank of England reporting that lenders expect to be able to offer more loans to households.
However, it looks likely that credit will be targeted at buyers with at least 25% to put down as a deposit, which by Halifax's measure means a lump sum of just under £40,000.
According to Halifax, those who can raise that kind of sum can take advantage of the lowest house price-to-earnings ratio in more than six years, with homes now costing 4.34 average earnings as opposed to 5.85 when the market was at its peak in July 2007.
The cost of servicing mortgage debt has also fallen, with interest rates slashed to 0.5%. Monthly repayments accounted for 22.6% of average income before tax in February, compared to a peak of 26.9% in October when the Bank base rate stood at 5%.
David Smith, senior partner at Dreweatt Neate estate agents, said the figures were proof that Nationwide's figures should not be viewed as the beginning of an upturn.
"There is an inherent volatility to house prices right now and because of this, a sideways-moving market, with the odd spike up or down, remains the most likely course for the rest of 2009."
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