Toucan

Property prices in the UK continue to fall with a 1.3 per cent drop in April, Halifax claims in its latest property price index.

As a result of the fall the annual change in prices headed into the red, with average prices down 0.9 per cent year-on-year to April.

This is the first annual fall for over twelve years, and follows research released earlier this week by Nationwide, which finds annual prices were down one per cent in April.

Prices have been declining over the past few months, with a sharp 2.5 per cent fall during March, and a 0.4 per cent dip in February.

"Price falls should be viewed in the context of the substantial price rises over recent years," said Halifax chief economist, Martin Ellis.

"UK prices nearly doubled 190 per cent over the ten years to August 2007. A growing economy, high employment levels, low interest rates and a shortage of new homes underpin housing valuations."

Halifax argues the decline in prices isdriven by a squeeze on spending power and the rapid rise in house prices in the last few years.

These factors have curbed housing demand. The rise in interest rates between August 2006 and July 2007 has increased average mortgage costs.

Ahead of the news Halifax had taken a decision to downgrade its forecast for 2008, and now expects prices to fall five per cent over the course of the year.

However, some areas of the country, such as Scotland, are likely to record modest price rises while other parts (e.g. Wales and West Midlands) are expected to see falls above the national average.

The Bank of England found this week transaction levels are also slowing – a clear sign of a depressed market – with just 64,000 mortgages granted for home purchases in March, the lowest level since records began.

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