UK house prices down 0.5% year-on-year

House and percents

UK house prices in the three months to June were 0.5% lower than in the same period a year earlier, taking the average price to £162,417, according to the Halifax House Price index.

While prices were 0.3% lower than they were in the previous quarter, in the month of June alone, prices increased by 1%.

Overall, however, the market has remained largely flat over the past year. 

Halifax's housing economist Martin Ellis says: "There has been a marked improvement in the annual rate of change over the past 12 months. A year ago, in May 2011, house prices were falling at an annual rate of 4.2%. In contrast, there has been broad stability recently with the annual rate between 0% and - 0.5% in each of the past three months."  

He also pointed out that the ending of the stamp duty holiday at the end of March "appears to have distorted house price movements and sales in recent months. Nonetheless, despite falling back in April and May, sales remain slightly higher than a year ago".  

Lack of confidence

Halifax estimates the ratio of affordability to now be 4.36, based on the national average earnings for full-time male employees, compared to 5.86 back in the second quarter of 2007 when the Bank of England base rate was 5.25%.

Ellis adds: "Continuing low levels of mortgage payments relative to income and recent increases in employment may have helped support house prices so far this year.  We expect little change in prices and sales over the remainder of the year provided that the UK's economic outlook does not deteriorate significantly."

Meanwhile, Mark Harris, chief executive of mortgage broker SPF Private Clients, says: "There is still a lack of confidence among buyers and sellers, and a lack of stock coming to market as a result.

But there are some great mortgage rates on offer, particularly from some of the smaller building societies, which is good news for those who are looking to buy or remortgage, and have the necessary deposit or equity."