House prices take a tumble in April

http://www.guardian.co.uk/money/2012/may/04/house-prices-april-halifax

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House prices fell in April at their fastest rate for 20 months according to Halifax, knocking nearly £4,000 off the value of the average property in Britain.

April's 2.4% fall follows the end of the stamp duty holiday for first-time buyers at the end of March, and Halifax said the market would remain "very challenging" for the rest of the year.

On an annual basis, prices are now 0.5% below their level a year ago. The average price in April was £159,883 compared with £163,796 in March, and remain one-fifth below the £199,612 peak of August 2007.

Halifax housing economist Martin Ellis said: "House prices continue to lack real direction with the current UK average price little different to where it was at the end of 2011. The monthly figures continue to fluctuate quite widely with a 2.4% decline in April, wiping out March's 2.2% rise.

"The ending of the stamp duty holiday for first-time buyers in late March appears to have boosted home sales early this year as buyers strove to beat the deadline, and has probably contributed to the volatility in house prices in the last few months."

The price drop brings the Halifax index in line with the Nationwide index, which showed a 1% decline in March followed by a 0.2% fall in April.

Despite its predictions of a flat market for the year ahead, Halifax said its customers are feeling more confident.

Its "housing market confidence" tracker found four in 10 people feel house prices will rise over the coming year, double the amount who believe prices will fall. "This is the most positive reading since Halifax began measuring consumer confidence in the housing market a year ago," the bank said.

But professional economists continue to believe the direction in house prices is flat or downwards. Howard Archer, chief economist at Global Insight said: "Our belief that house prices will drift lower over the coming months is reinforced by the Nationwide reporting that house prices fell 0.2% in April, while Bank of England data showed muted mortgage approvals for house purchases in March. Specifically, we expect house prices to fall by a further 3% by the end of 2012.

"Housing market activity is very low compared with long-term norms. And the economic fundamentals currently look worrying overall for the housing market, with unemployment high and likely to rise further, earnings growth muted and the outlook uncertain."

The last month has seen tightening conditions in the mortgage market, with many lenders increasing their standard variable rates. This week Co-operative Bank became the first major lender to completely withdraw from interest-only lending. Other banks have restricted interest-only loans to borrowers able to stump up a 50% deposit.