Halifax: House prices up 0.5% in May in "broadly stable" market

UK house prices have risen by 0.8 per cent in the three months to the end of May, according to the Halifax house price index.

This is the second increase of the quarterly underlying measure of house prices in a row and the biggest since August 2011, following six consecutive falls between October 2011 and March 2012.

On a monthly basis, UK house prices increased by 0.5 per cent in May. This followed two markedly contrasting months; house prices were up by 2.2 per cent in March, but fell by 2.3 per cent in April, mainly due to homeowners taking advantage of the stamp duty holiday deadline before it ran out at the end of March.

Martin Ellis, Halifax housing economist, said: "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."

Sales of UK homes declined by 18 per cent between March and April providing further evidence of the spike given to house sales by the stamp duty holiday deadline. Halifax reports that market conditions have tightened since the end of 2011 as the supply and demand balance as measured by the ratio of house sales to the stock of unsold properties has tightened.

Ashley Alexander, managing director, of MeetMyAgent.co.uk said: "Broad stability is a euphemism for rank inactivity.

"The price rebound from April to May reflects a lack of transactions, not a sudden rejuvenation of the market."

UK house prices are 0.1 per cent down on May 2011 and continues an improving trend in the annual rate and represents the smallest annual decline in house prices for 17 months since October 2010.

Martin Ellis said: "Whilst 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.

Howard Archer, Chief UK & European Economist for forecasters IHS Global concludes that he believes house prices will continue to fall moderately through the rest of 2012.

He said: “The Halifax data do little to dilute our belief that house prices are likely to trend modestly downwards over the coming months in the face of soft economic fundamentals and low and fragile consumer confidence. Specifically, we expect house prices to fall by around 3% by the end of 2012.”

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