The Halifax has recently released its House Price Index (HPI) for May, which showed that house prices have fallen by 2.4% since April and was 3.8% lower than in May 2007.

The Halifax’s HPI, which records the mortgage approval price for a house, found that the average house price in May was £184,111, a fall of over £4,000 from April when it was £188,704. Prices are now £12,000 less than they were a year ago (£196,636), which is the largest annual fall since April 1993 (-4.9%).

Martin Ellis, chief economist for the Halifax, told PIN: “We expect house prices to fall further over the coming months reflecting the squeeze on households’ income due to rising fuel and food prices and the reduction in credit availability. These factors are curbing housing demand and putting downward pressure on prices. Price falls should, however, be measured against the significant gains in recent years. High employment levels, low interest rates and a shortage of new homes support housing valuations. These factors should limit the decline in prices.”