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House prices fall by 0.6 per cent

House Prices fell by 0.6 per cent in June following a drop of 0.5 per cent in May, according to Halifax’s house price index.

Prices in the second quarter of 2010 were 0.1 per cent lower than in the first quarter of 2010.

According to Halifax, the average UK house price now stands at £166,203.

The lender says house prices in June were 6.3 per cent higher on an annual basis. This was below the 6.9 per cent increase in May, which was the highest since October 2007, when it reached an 8.9 per cent increase.

Bank of England figures show the number of mortgages approved to finance house purchase – a leading indicator of completed house sales – were largely unchanged between April and May, at a seasonally adjusted 49,800. Approvals in the three months to May, however, were 3 per cent lower than in the preceding three months.

Halifax housing economist Martin Ellis says: “House prices fell by 0.6 per cent in June following a similar decline in May.  Prices in the April to June quarter were largely unchanged compared with the first three months of the year.  This continued the slowdown in house price growth since the beginning of the year following the moderate recovery in prices during much of 2009.  This pattern is in line with our view that house prices will be broadly unchanged over 2010 as a whole.

“A shortage of properties for sale in 2009 contributed to an imbalance between supply and demand and was a key factor driving up house prices last year.  An increase in the number of properties available for sale in recent months has helped to reduce the imbalance, relieving the upward pressure on prices.  The low level of interest rates, however, continues to support housing demand.”

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