UK house price growth on an underlying basis increased for second successive month in May, according to the latest Halifax House Price Index. 

Commenting, Martin Ellis, housing economist, said:
"House prices in the three months to May were 0.8% higher than in the previous quarter, marking the second successive increase in this measure of the underlying trend. The more volatile monthly figures showed a 0.5% rise in May following April's 2.3% decline.

"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.

"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."

Key facts

• House prices in the three months to May were 0.8% higher than in the preceding three months (December 2011-February 2012). This was the second successive increase in this measure of the underlying trend in prices following six consecutive falls between October 2011 and March 2012. It was the biggest three monthly increase since August 2011 (+0.9%).
• On a monthly basis, house prices increased by 0.5% in May. This follows the significant monthly rises and falls recorded in the previous two months: +2.2% in March and -2.3% in April.
• Prices in the three months to May were 0.1% lower than in the same period a year
  earlier. This continued the improving trend in the annual rate and was the smallest yearly Decline in house prices for 17 months (October 2010:+1.2%).
• Small rise in the average UK house price in the first five months of 2012. The UK
  average price in May 2012 was 0.7% higher than in December 2011, at £160,941.
• Sharp fall in sales in April. Home sales fell by 18% between March and April, providing further evidence that the expiry of the stamp duty holiday for first-time buyers at the end of March encouraged some to bring forward their house purchases to beat the deadline. Nonetheless, sales were still 3% higher than in April 2011. (Source: HMRC)
• Housing market conditions have tightened slightly since the end of 2011. The supply / demand balance in the market, as measured by the ratio of house sales to the stock of unsold properties, has tightened a little in recent months. This modest improvement in market conditions has probably helped to support house prices. (Source: RICS's monthly survey)

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