House Prices Fall Again, June Figures Show

House prices fell by 0.6% in June, the latest Halifax House Price Index reveals. This follows a similar fall in home values in May.

The slowdown in the property market continued in June as house prices fell by 0.6%, following a 0.5% decline in May. Prices in the April to June quarter were largely unchanged according to the Halifax Index. House prices in the second quarter of 2010 were 0.1% lower than during the first quarter of the year, however.

Although 0.6% and 0.5% price falls are only slight declines in home values, these figures do support the view that the property market will remain largely flat through 2010.

The rise in house prices seen in 2009 is now being attributed to a shortage of properties for sale which created an imbalance between supply and demand. There is now a better balance between buying activity and the number of sellers as an increasing number of home owners are being encouraged to market their properties now that HIPs have been abolished.

This can be seen from the ratio of house sales to the stock of unsold properties on surveyors’ books which fell for the fifth time in the past six months in May. More properties are being marketed than are being sold.

The demand for mortgages, and also the number of home loan approvals is also a good leading indicator of the health of the property market. Bank of England industry-wide figures show that the number of mortgages approved to finance house purchase were largely unchanged between April and May, at a seasonally adjusted 49,800. Approvals in the three months to May, however, were 3% lower than in the preceding three months, which also indicates a modest softening in housing market activity.