House prices continue to fall

House prices fell for the eighth month in a row in May as a "buyer's strike" continued to grip the market, figures suggested.

Information group Hometrack said the average value of a home in England and Wales fell by 0.5% during the month to stand at £172,200.

The drop follows a 0.6% price fall in April and leaves houses costing 1.9% less than they did a year ago, according to the firm.

Hometrack's research director Richard Donnell blamed the further slide on a 6.7% drop in the number of buyers registering with agents, a deterioration from the 2.8% reduction last month. "What we referred to last month as the 'buyer's strike' continues," he said.

The survey also showed an increase in the time taken to sell a property which now stands at 9.8 weeks, up three weeks from 5.8 weeks a year ago.

Price drops were recorded in 53% of postcodes registering lower prices over May compared to April, up from 51% the previous month.

The housing market has been coming under increasing pressure in recent months due to a combination of stretched affordability and the problems in the mortgage market, caused by the credit crunch.

This year has seen a series of gloomy housing data, including the biggest monthly price drop for 16 years, or 2.5%, in March, according to Britain's biggest mortgage lender Halifax Bank of Scotland.

Mr Donnell said only an improvement in buyer confidence could reverse the house price decline. "The current trends in the survey indicate that pricing looks set to remain under downward pressure over the coming months," he said.

"The fall in buyer confidence over the last six months has certainly impacted on transaction volumes but we do not believe that this is a precursor to a major rise in forced sales and large price falls. It seems likely that in that short term prices will continue to edge down until they reach a level where buyers are prepared to commit."