Turgid housing market continues downward slide

The average UK house price in May of £160,519 was 1.4% lower than in December 2010 on a seasonally adjusted basis.

On an annual basis, prices in May were 4.2% lower as measured by the average for the three months to May against the same period a year earlier.

Halifax housing economist Martin Ellis said: "House prices continue to drift modestly downwards as measured by the underlying trend. Prices in the three months to May were 1.2% lower than in the previous three months; unchanged from April. There was a 0.1% rise in prices in May following April’s 1.4% decline.

"Low earnings growth, higher taxes and relatively high inflation are all putting pressure on household finances. Confidence is also weak as a result of uncertainty about the economic and employment outlook. These factors are probably constraining housing demand and applying some downward pressure on prices.

"Overall, we expect a moderate improvement in the economy during the remainder of 2011, which combined with continuing low interest rates, is likely to support housing demand. This should prevent a further marked fall in prices and help to stabilise property values later in the year."

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