Chief economist Fionnuala Earley says falling levels of market activity meant that prices fell by 1.1 per cent during April.
She says: “This is the first year-on-year fall in prices since March 1996 and brings the price of a typical house to £178,555, £1,759 lower than at this time last year.”
But Earley says the Special Liquidity Scheme should help to stabilise the wholesale financial markets.
She says: “The scheme appears well thought out and should help to stabilise the markets which have seen significant volatility in recent weeks. However, the scheme is unlikely to mean that house prices and mortgage lending will return to levels seen at this time last year.
“Weakening housing market sentiment and demand, unrelated to the financial market turmoil, will mean that we should expect slower market conditions. However, the Bank’s measures should help to restore a more orderly transition and ultimately bring about a more stable market.”