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House prices down 4.2% year-on-year in May

House prices fell 4.2 per cent year-on-year in May, according to the latest house price index from Halifax.

On a monthly basis, house prices increased by 0.1 per cent from £160,393 to £160,519.

Prices fell by 1.2 per cent in the three months to May compared to the previous three months.

Halifax housing economist Martin Ellis says: “Low earnings growth, higher taxes and relatively high inflation are all putting pressure on household finances.  Confidence is also weak as a result of uncertainty about the economic and employment outlook.  These factors are probably constraining housing demand and applying some downward pressure on prices.

“Overall, we expect a moderate improvement in the economy during the remainder of 2011, which combined with continuing low interest rates, is likely to support housing demand.  This should prevent a further marked fall in prices and help to stabilise property values later in the year.”

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