UK house prices continue to fall as the housing market falters in the recession.

According to the latest survey from the Halifax, house prices in the UK are declining sharply and are likely to continue falling.

In April 2009, house prices dropped a further 1.7%, making the annual decline 17.7% from the previous 17.5%. The 1.7% drop in April is slightly less than the 1.9% fall in March.

The average UK house now costs £154,716, £33,264 less than houses this time last year.

In its house price index, Halifax also pointed out that the house price to earnings ratio – a key affordability measure – is at its lowest since 2002 at 4.26. 

Also the Halifax house price index indicates an underlying trend as the three months to April showed a greater decline than the preceding three months.

Commenting on the results, Martin Ellis, Housing Economist, said: “Rising unemployment, low consumer confidence and the reduced availability of credit are all expected to exert downward pressure on the housing market over the next few months. As a result, further house price declines are likely.”

However, with falling prices, mortgage payers are able to benefit from the weakened market. Monthly repayments for the average mortgage borrower have fallen from 26.9% of average gross household income in October last year to 22% in March 2009.

The average mortgage rate for existing borrowers has also dropped from 5.82% in October 2008 to 3.83% in March 2009 and is the main cause for the drop in monthly repayment costs.

From the recent figures, Halifax believes that there are “tentative signs of a stabilisation in activity albeit at a very low level.” The number of mortgage approvals has increased by 19% between the fourth quarter of 2008 and the first quarter of 2009. According to Halifax: “Approvals in March, at 39,230, were the highest since May 2008, but were still 34% lower than in 2008.”

The figures also show that the increase in the stamp duty exemption threshold has been beneficial for many homebuyers with nearly six in every ten home sales falling below the threshold between September 2008 and January 2009.