June saw average house prices fall by 0.5 per cent, the latest survey from Halifax has shown.
Taking the quarterly total decline to 1.9 per cent, this marks the smallest monthly drop since the first quarter of 2008, suggesting that the downward spiral in house prices is losing its momentum.
The statistics also show a "modest" improvement in sales activity, with house purchase approvals increasing for the fourth successive month in May, at their highest level since April 2008 and 10 per cent higher than in May 2008.
An improvement in affordability and lower interest rates are to thank for the increased activity in the mortgage market, Halifax says, while, coupled with the lower number of properties on the market, has helped to stabilise house price activity.
But, it is too soon to say that this news means the end is in sight for the problems in the housing market, says Martin Ellis, housing economist at Halifax.
"Whilst there have been encouraging recent signs of improvement, the outlook for the UK economy remains uncertain with unemployment set to continue rising for sometime. Overall, we expect to see a continuing mixed pattern of monthly house price rises and falls over the remainder of 2009."
Responding to the Halifax House Price Index, Kesh Thukaram, managing director of Smartlandlord.co.uk also warned about overestimating the positive signs: "Prices look likely to fall again after this," he said. "Rightmove's data points that way. The Halifax's index lags behind Rightmove's because it measures every mortgage approvals rather than Rightmove's - which only looks at asking prices posted by sellers.
Simon Rubinsohn, chief economist at the Royal Institute of Chartered Surveyors (RICS), also said that the Halifax results paint a different picture to other market statistics: "This drop stands in marked contrast to the figures published by the Nationwide Building Society last week which recorded a 0.9% gain."
"Nevertheless, the continuing weakness in the former series provides a timely reminder that despite the better newsflow emerging from the housing market it is far from clear that prices have bottomed. The combination of further job losses and a continuing lack of mortgage finance remain major headwinds for the market."
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