House prices slumped in the spring time heat, but experts have said that modest improvements can be expected over the rest of the year.
Prices in the three months from March to May were 1.2% lower than in the preceding three months, showing an underlying trend of declines – as has consistently been the case over the last year, according to Halifax.
It means that at the end of last month, the average price paid for a home in the UK was £160,519.
The property market remains subdued; the number of properties sold in the first four months of 2011 was 5% lower than in the same period last year - 279,000 against 293,000 - according to the latest figures from HMRC.
There does appear to be tentative signs of recovery, however, the number of mortgages approved to finance house purchase is a leading indicator of completed house sales. Industry-wide approvals in the three months from February to April were 2% higher than in the preceding three months on a seasonally adjusted basis, according to the latest Bank of England figures.
"House prices continue to drift modestly downwards as measured by the underlying trend," said Martin Ellis, housing economist.
"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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