There was a 1.4% fall in prices in April following no change in March.
"Weak confidence amongst households, partly due to uncertainty over the economic outlook, is constraining housing demand and resulting in some downward movement in prices.
"Signs of a modest tightening in housing market conditions, a relatively low burden of servicing mortgage debt and an increase in the number of people in employment are all likely to be providing support for house prices, curbing the pace of decline. There are signs that house sales are stabilising albeit at a level lower than the historical average."
* Prices in April were 3.7% lower than a year ago as measured by the average for the three months to March against the same period a year earlier. This is the biggest annual decline since October 2009 (-4.7%);
* Modest tightening in housing market conditions. The ratio of house sales to the stock of unsold properties on surveyors’ books – according to the RICS monthly survey – is a measure of market conditions that has historically proved to be a good predictor of short-term house price movements. This ratio increased slightly in March for the second consecutive month, suggesting a modest tightening in market conditions. Moreover, the ratio remains higher than the levels recorded during the second half of 2008 and early 2009 when house prices fell sharply. A lower level of properties available for sale largely explains why current market conditions are tighter than in this period;
* The low interest rate environment has reduced the burden of servicing mortgage debt. Typical mortgage payments for a new borrower have fallen from a peak of 48% of average disposable earnings in mid 2007 to 29% in the first quarter of 2011. This key measure of affordability is at a better level than the long-term average over the past 25 years (37%) and is an important factor supporting housing demand;
* House sales show further signs of stabilising. The number of mortgages approved to finance house purchase – a leading indicator of completed house sales – increased by 2% between February and March on a seasonally adjusted basis, according to Bank of England industry-wide figures. Approvals in 2011 Quarter 1 were also 2% higher than in 2010 Quarter 4.
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