House price inertia caused by economy

This was the second successive increase in this measure of the underlying trend in prices following six consecutive falls between October 2011 and March 2012. It was the biggest three-monthly increase since August 2011 (+0.9%).

On a monthly basis, house prices increased by 0.5% in May. This follows the significant monthly rises and falls recorded in the previous two months: +2.2% in March and -2.3% in April.

Prices in the three months to May were 0.1% lower than in the same period a year earlier. This continued the improving trend in the annual rate and was the smallest yearly Decline in house prices for 17 months (October 2010:+1.2%).

Martin Ellis, housing economist, said: "House prices in the three months to May were 0.8% higher than in the previous quarter, marking the second successive increase in this measure of the underlying trend. The more volatile monthly figures showed a 0.5% rise in May following April’s 2.3% decline.

"While there has been a modest improvement in the trend for house prices recently, the current average UK price is very similar to the levels both a year ago and at the beginning of this year. We expect this situation to continue with prices likely to still be around today’s levels at the end of 2012 as the ongoing tough economic environment constrains housing demand.

"Recent monthly house sales figures have clearly been affected by the ending of the stamp duty holiday for first-time buyers in late March. Overall, the trend for sales – like that for prices – appears to be one of broad stability."

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