Thursday, 5 July 2012 12:11 PM
House prices recovered from the lull that followed the end of the stamp duty holiday with a 1 per cent rise in June, according to Halifax.
The bank says prices were still down 0.3 per cent in last three months and 0.5 per cent in the last year but its latest house price index shows that the pace of decline has slowed considerably.
In May 2011 prices were falling at an annual rate of 4.2 per cent but the last three months have seen the annual rate stabilise at between 0 per cent and -0.5 per cent.
The last 12 months have now seen an even number of monthly rises and falls while the underlying three-monthly rate is back in negative territory following two small gains in May and April. The average price of a UK home is now £162,417.
Halifax points out that home sales in April and May were 13 per cent lower than in the previous two months, reflecting the fact that some first-time buyers brought forward purchases to beat the end of the stamp duty holiday at the end of March.
House prices edged back up to 4.37 times earnings but mortgage payments remain affordable by historic standards. Payments for a new borrower stood at 26 per cent of disposable earnings in the second quarter compared with an average of 36 per cent over the last 27 years and a peak of 48 per cent in 2007.
Martin Ellis, housing economist at Halifax, said: “The ending of the stamp duty holiday at the end of March appears to have distorted house price movements and sales in recent months. Nonetheless, despite falling back in April and May, sales remain slightly higher than a year ago.
"Continuing low levels of mortgage payments relative to income and recent increases in employment may have helped support house prices so far this year. We expect little change in prices and sales over the remainder of the year provided that the UK's economic outlook does not deteriorate significantly."
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