House prices fell by 1.3% in April, and 0.9% annually, says the latest report from Halifax. Regionally there are variations, as prices continue to rise in Scotland while other areas like Wales and the West Midlands are expected to fall further than the national average, but overall the lender is predicting a mid single digit decline by the end of the year.
However, falls need to be taken in the context of the rapid raise over the past decade, the report adds, pointing out that the average UK house price rose by more than £130,000 between August 1997 and August 2007.
Rising interest rates and declines in real earnings have contributed to the falls, but in the meantime Halifax points out that the economy continues to grow, and employment now stands at a record high. In the meantime, interest rate cuts are expected over the coming months to alleviate the slowdown.
Chief economist Martin Ellis said: House prices fell by 1.3% in April and we expect further falls. However, with regional variations we expect to see some areas of the country record modest price rises while other parts are expected to see falls above the national average.
Other economists are not so optimistic. Seema Shah from Capital Eocnomics commented: These house price falls have come with the economy only having registered a modest slowdown. Strong fundamentals, such as the still relatively healthy labour market, clearly arent providing much support for house prices. With the economy and labour market set to weaken further, our forecast for a 20% fall in house prices by end-2009 is firmly on track.