UK house prices saw an annual fall of 0.9% in April, says the UK's biggest mortgage lender.

The Halifax also said that prices dropped by 1.3% in Fuel to be shipped into Scotland ...
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The lender said it now expected a "mid-single-digit" percentage decline in prices in 2008.

But it expects bigger falls in Wales and the West Midlands, with Scotland bucking the trend with a modest rise.

Halifax's chief economist, Martin Ellis, said the decline in prices was driven by a squeeze on consumers' spending power and the rapid rise in house prices in the last few years.

The figures are the latest to show a slowdown in the housing market, following rival mortgage lender Nationwide's report of a 1% fall in year-on-year house prices in April.

Earlier in the week the Bank of England said that new mortgage approvals had fallen to their lowest level since records began in 1990.

Mortgage deals have continued to rise in price and availability has fallen, despite recent rises in interest rates.

Lenders are demanding higher deposits as they tighten their lending criteria.

Regional variations

The Halifax said the number of mortgages approved to finance house purchases in the first quarter of 2008 was 41% lower than a year earlier.

It said this was the first year-on-year fall in house prices since February 1996, but the picture would not be the same across the UK.

It expects Scotland to see a "modest rise" in property prices in 2008, but areas such as Wales and the West Midlands to see bigger falls than the national average.

But Mr Ellis added that a balanced view of the state of the market should take into account recent history.

"Price falls should be viewed in the context of the substantial price rises over recent years," he said.

"UK prices nearly doubled (190%) over the ten years to August 2007. A growing economy, high employment levels, low interest rates and a shortage of new homes underpin housing valuations."

He expected the Bank of England to cut interest rates further in the coming months "as concrete evidence of an economic slowdown accumulates".

(BBC)

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