Housing economist Martin Ellis said: "The house price to earnings ratio – a key measure of housing affordability – is at its lowest level since the autumn of 2002 at 4.26.
"Mortgage rate cuts have reduced monthly payments for the average existing borrower by £111 since October 2008, also boosting affordability. Mortgage approvals remain at historically very low levels."
But he also had a warning.
"Rising unemployment, low consumer confidence and the reduced availability of credit are all expected to exert downward pressure on the housing market over the next few months. As a result, further house price declines are likely," Ellis said.
Other details from the April Halifax House Price Index showed that the UK average price has returned to where it was five years ago in April 2004 (£154,511).
House prices in April were 17.7% lower on an annual basis.
In addition, the house price to earnings ratio – a key affordability measure – is at its lowest for more than six years.
The house price to average earnings ratio has declined by 27% from a peak of 5.84 in July 2007 to an estimated 4.26 in April 2009. The ratio is at its lowest level since September 2002 (4.14). The long-term average is 4.0.
Prices in the three months to April compared to the previous three months – an indicator of the underlying trend – were 3.3% lower. This is slightly below the quarterly rate of decline of 5-6% recorded consistently between June 2008 and January 2009.
Mortgage debt servicing costs for all borrowers have eased in recent months. Monthly repayments for the average mortgage borrower have fallen from a peak of 26.9% of average gross household income in October 2008 to 22.0% in March 2009. The decrease in the average mortgage rate paid by existing borrowers from 5.82% in October 2008 to 3.83% in March 2009 is the main cause of this reduction. A borrower with the average outstanding mortgage of £107,000 has seen their monthly repayments fall by £111 since October 2008.
There are some tentative signs of a stabilisation in activity albeit at a very low level. Bank of England industry-wide figures show that the number of mortgages approved to finance house purchase – a leading indicator of completed house sales – increased by 19% between the final quarter of 2008 and the first quarter of 2009, on a seasonally-adjusted basis. Approvals in March, at 39,230, were the highest since May 2008, but were still 34% lower than in March 2008.
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