Published: May 8 2009 09:41 | Last updated: May 8 2009 09:41

UK house prices in April fell for the fourteenth month in a row, leaving the average home valued at no more than it was three years ago, according to the latest FT House Price Index.

House prices in England and Wales in April fell by 1.1 per cent from the month before, and confirm the trend – if not the precise level of decline – seen in the widely-watched mortgage lender indices compiled by Nationwide and Halifax.

Peter Williams, chairman of Acadametrics, which compiles the Index on behalf of the FT, said there was little to indicate that the bottom of the housing market had been reached.

“The evidence from across the market remains mixed and there were few who were confidently predicting the bottom of the market,” Mr Williams said. Although recent surveys of consumer confidence show an improving trend, and the number of transactions has risen recently, overall turnover remains very depressed.

The latest data show the weakness in house prices is widely spread, with all regions in England and Wales sharing the pain – whether on a monthly or annual basis.

Wales, which had much sharper declines in housing values last year than the rest of the country, was the only area to show a drop of less than 10 per cent for the year through April.

In fact, Acadametrics noted, Wales was one of the first regions to experience negative annual growth in house prices, raising the possibility that it may be the first to actually hit bottom. “This is not so much ‘green shoots’ recovery, but a reluctance by sellers to reduce prices any further,” Mr Williams said.

Indeed, the fall in the number of transactions overall is striking. In the first quarter of 2009, sales were down by 54 per cent from the first quarter of 2008, and within some towns, the decline in the number of sales has been dramatic. For example, transactions were down by 72 per cent in Thurrock, by 67 per cent in Luton and in Slough.

The region with the highest year-on-year decline is the southeast, one of the wealthiest regions, where prices were off 15.4 per cent since April 2008.

All counties and unitary districts have recorded falling prices over the past three months on an annualised basis, albeit at varying rates. The most severe declines were in south Gloucestershire – where prices were down 19.3 per cent, and in Brighton and Hove, where they were down 19.2 per cent.

The smallest declines over three months on an annualised basis were seen in Rutland where prices fell by a modest 1.9 per cent and in Pembrokeshire where they were off by 3.2 per cent.

Within London, which is showing one of the largest declines in price terms of any region in the nation, 32 out of 33 boroughs saw declines. The exception was the City of London which has a very small number of privately owned homes and frequently records volatile changes in house prices

Freak number or sign that the UK housing market is bottoming out? After months of gloom, indicators of house hunting activity have started to send out contrasting signals. And then, this week, the Halifax house price index suggested an unexpected bottoming out might be under way. House prices in January rose by 1.9 per cent on the previous month, ending a downward run that has left them 20.5 per cent below the index’s August 2007 peak.

To foreign buyers, prime London properties may superficially now look tempting, with the average house in the key £1m to £2.5m sub-sector now 25.3 per cent cheaper than it was at its peak in March 2008, according to Knight Frank. Taking into account the yen’s appreciation against sterling, for example, the cost to a Japanese buyer of a house in this price band has fallen by 48 per cent in 10 months. For eurozone buyers, prices are now about 30 per cent off their peak.

With the UK economy set to contract by 2.5 per cent to 3 per cent this year, a turnround seems far-fetched. News yesterday of a 51 per cent jump in the number of insolvent companies in the fourth quarter of 2008 is a harbinger of rising unemployment. Given that all but the most liquid buyers are struggling to obtain mortgages, house prices will find little support from improving affordability. If you trust derivatives markets, expect two years of falling prices, then stagnation

FT.com