House prices still falling

HOUSE prices fell by 0.1% in May, marking the 11th consecutive month of falls, according to the latest survey by UK property website Hometrack.

The average house in the UK now costs £161,900, down from a peak of £167,000 in June last year and 2.3% lower over the past 12 months, the survey found.

May marks the third month in a row when house prices have fallen at a rate of just 0.1%, however, suggesting that the market is now stabilising, Hometrack said. Sales prices as a percentage of asking prices increased slightly over the month to 93.6% from 93.3%.

A continued improvement in the number of housing transactions suggests that the market may be starting to pick up, Hometrack said, with sales agreed rising by 7.6% this month. This increase is mainly due to a pick-up in the number of buyers, although an over supply of properties means that it remains a buyer's market and prices are still decreasing.

'House prices are falling like drizzly spring rain, slowly and over most parts of the country. While there is no sunny outlook in prospect, there are no signs of a gathering storm either. The forecast for the next couple of months looks set to remain dreary,' said Hometrack housing economist John Wriglesworth.

Hometrack has now downgraded its forecast for house price growth in 2005 to 0% from 3% previously. 'The year looks set to end as it began in terms of house prices, as flat as a pancake,' Wriglesworth said.