House prices have peaked - Halifax

Housing price rises have passed their peak, according to Britain's biggest mortgage lender, which said yesterday that property prices fell 0.4% in May - the third monthly decline in four months.

The data from the Halifax reveals that the average home fell in value by £365 to £84,290 last month. This caused the annual rate of house price inflation to fall to 11.2% from 14.2% in April. In January annual price growth was running at 16%.

The figures are the latest in a series of sets of data which show the property market as slowing down following the exceptional surges of the last 18 months, during which time prices have risen at their fastest rate since 1989. The Halifax, and Nationwide building society, the two leading commentators on house prices, frequently disagree over the state of the property market, but for once both are in agreement that prices fell 0.4% last month.

The new figures will strengthen the case for leaving interest rates unchanged when the Bank of England's monetary policy committee makes its monthly decision today.

Three price falls in four months could be said to represent a partial "correction" following the sharp rises in prices late last year and early this year, said the Halifax

It believes the slowdown is largely in response to the four mortgage rate rises since last September and the abolition of mortgage interest tax relief in April, which between them have added nearly £750 to the annual mortgage bill of a typical borrower with a £60,000 home loan.

The Halifax said a rapid slowdown was unlikely - it predicts that annual house price growth will stabilise at around its current level over the coming months, and will end the year at 12%.

There was further good news for the MPC in a survey showing that retail prices fell for the second month a row in May, according to the Confederation of British Industry. The CBI found that sales were at a three-month peak but that retailers had cut prices to move their goods.

Related sites:
Halifax house price index
Nationwide house price index
Land Registry house price index