Figures released by the Halifax on Wednesday show that house prices in the UK declined by 0.6% in the first quarter of this year, compared to Q4 2010 and are predicted to show a year-on-year fall for 2011 as a whole. House prices did increase by 0.1% in March but were still 2.9% down on the same period last year.
Martin Ellis, a housing economist at Halifax, said the slight increase in March could be due to improved employment levels but continued uncertainty about the economy is likely to limit the demand for homes this year.
The Halifax predicts a year-on-year decrease of 2% in house prices this year. Howard Archer from IHS Global Insight has a more pessimistic view saying the price drop will be nearer to 5%.
The Bank of England Monetary Policy Committee met again yesterday and as expected kept the base interest rate at its historical low 0.5%. However, the policy makers are showing increased signs of disagreement and economists believe a rise in rates will happen before much longer.
At the end of last month, the Bank of England published data showing that mortgage approvals in February were around 47,000, a similar figure to the previous month. However this is still 60% lower than 4 years ago.
In the March budget, George Osborne announced various measures to support the housing market. But the FirstBuy scheme, designed to help first time buyers, will have very little impact as it is only aimed at 10,000 households.
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