House prices were down 3.7 per cent on an annual basis in April, according to the latest house price index from Halifax.
The average price now stands at £160,395, down from £168,593 in April 2010, the biggest annual decline since October 2009.
House prices were down 1.4 per cent from £162,712 in March.
Halifax housing economist Martin Ellis says: “Weak confidence amongst households, partly due to uncertainty over the economic outlook, is constraining housing demand and resulting in some downward movement in prices.
“Signs of a modest tightening in housing market conditions, a relatively low burden of servicing mortgage debt and an increase in the number of people in employment are all likely to be providing support for house prices, curbing the pace of decline. There are signs that house sales are stabilising albeit at a level lower than the historical average.”
Phoebus Software managing director Paul Hunt says: “Dropping prices will give more weight to the argument to keep the Bank rate low and it now seems likely that we will not see a rise until later this year. That is great news for those repaying mortgages and for people looking to remortgage as the price of fixed rate deals has started to decline too.”