Halifax Index Continues Trend; Shows UK House Prices Falling Slower

The Halifax released the figures for May from its UK house price index today, and they showed that the rate of decline in UK house prices is slowing. This is a trend that has emerged in the last few price indices, including that of the Land Registry, and Nationwide.

In fact both the Nationwide and Halifax showed the average UK house price rising in May, by 0.3% and 2.3% respectively. But it is in the quarterly indices -- widely regarded as the more accurate measure of UK house prices -- that they both showed the rate of decline slowing, from 5-6% to 3.1% according to the Halifax, and from 4.7% to 4.2%.

This stabilisation of UK house prices is coming about because of a consistent rise in activity over the past 3-4 months, combined with a shortage of supply. This makes it a shaky stabilisation, more like a bumpy precipice; if supply rises as a result of the current positive news, then it will likely cause prices to begin falling more quickly again.

Joseph Harwood of Gloucester property investment firm Rock Star Investment Gloucestershire, believes the price rises and "so called" stabilisation are bad news for the UK housing market.

"Prices still have further to fall, because homes still aren't affordable for first time buyers," he said.

"The quarterly rate of decline slowing sent the average UK house price back up to 4.36 times the average salary, after falling to its lowest point for years at 4.26 in April. Very few -- if any -- impartial experts believe the market will bottom until this measure reaches 3.7 or lower, thus we would be better to get the price falls over with as oppose to prolonged agony," he explained.

So, some are quick to say this is it, the crash is over and we will be bumping around at this level before prices start to rise again in the near future, and others say this is a dead cat bounce, and prices are due to see more accelerated falls in the near future. Time will tell who is correct.