The Halifax house price index for June suggests that house price pressures have continued to ease although the expected downward adjustment in prices has not yet affected all areas of the market.

House prices rose by a seasonally adjusted 0.1% m/m in June although average prices in the second quarter of 2005 were the same as the first. The Halifax report annual inflation as a three month moving average and this fell from 5.6% in May to 3.7% in June, the lowest it has been for four years.

At the regional level outright price falls of around 1% or more were seen in four regions, Greater London, East Anglia, the South East and the North. As a result, the annual rate of house price inflation in Greater London turned negative for the first time since 1996. The South West, Wales, North West however have all seen a rise in house prices, suggesting that although the market appears to be cooling, there is still reasonable activity.

Nationwide suggests that since there is little sign of any upturn in confidence and the market is still over valued, it seems likely that regional price falls will become more widespread as the year progresses.