House prices in the UK rose by 0.5% in May 2012 to an average of £160,941, according to the latest Halifax house price index, but remain down 0.1% on an annual basis.
The rise follows a 2.4% drop in April, but economists said that despite the volatility house prices remained broadly unchanged since the start of 2011.
The three-monthly figures, which are seen as a more reliable indicator of the way the market is going, showed a 0.8% rise in prices – the second successive quarter of increases and the largest rise since August 2011.
However, Halifax’s housing economist, Martin Ellis, said: “Whilst there has been a modest improvement in the trend for house prices recently, the current average UK price is very similar to the levels both a year ago and at the beginning of this year.
“We expect this situation to continue with prices likely to still be around today’s levels at the end of 2012, as the ongoing tough economic environment constrains housing demand.”
Halifax’s index had shown a 2.2% leap in prices in March as the first-time buyer stamp duty holiday on properties costing up to £250,000 drew to an end, while other measures showed a flurry of transactions ahead of the deadline.
Ellis said: “Recent monthly house sales figures have clearly been affected by the ending of the stamp duty holiday for first-time buyers in late March. Overall, the trend for sales – like that for prices – appears to be one of broad stability.”
Howard Archer, chief UK economist at IHS Global Insight, said the Halifax index had been “particularly volatile” in recent months, “even allowing for the distortions caused by the ending of a stamp duty concession in late-March”.
“The 0.5% month-on-month rise reported in May does little to change our view that house prices are likely to trend modestly lower over the coming months. Specifically, we expect house prices to fall by around 3% by the end of 2012,” he said.
“Furthermore, the danger that house prices could fall even more than this is being lifted by the increased downside risks to the UK economic outlook, particularly coming from the problems in the eurozone centred on Greece and Spain.”
Rival lender Nationwide building society also reported a small increase in prices in May, saying they were up 0.3%. However, it also showed a year-on-year fall, this time of 0.7%.
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